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A senior executive at Coinbase has warned that US competitiveness could suffer if dollar-backed stablecoins cannot offer user rewards, as China moves toward interest-bearing digital wallets. The warning followed an announcement by the People’s Bank of China that banks will begin paying interest on digital yuan wallets from January 2026, marking a significant policy shift.
The issue centers on whether US rules will limit the features of stablecoins. At the same time, global rivals expand incentives, raising a central question: could strict stablecoin rules weaken the US dollar's international position?
Faryar Shirzad, Coinbase’s chief policy officer, raised the concern in a public post that referenced China’s latest digital currency plan and the US regulatory debate around stablecoins. He pointed to the GENIUS Act, passed in July, which bars US-issued stablecoins from offering direct yield and limits their role to payments.
Shirzad said overly rigid enforcement could benefit foreign stablecoins and central bank digital currencies, which may offer incentives unavailable to US products. Crypto firms and industry groups have urged lawmakers to preserve flexibility within the law, arguing that rewards do not threaten the traditional banking system.
A December 18 letter from the Blockchain Association and more than 125 participants stated that no evidence shows that yield-bearing stablecoins harm community banks.
The policy debate gained urgency after Lu Lei, deputy governor of the PBoC, announced that commercial banks will pay interest on digital yuan wallets starting January 1, 2026. Lu said the digital yuan will shift from digital cash toward digital deposit money, while supporting value storage and cross-border payments.
The change represents a significant update to China’s central bank digital currency framework and signals a stronger push for broader adoption. China has expanded its CBDC infrastructure despite banning domestic cryptocurrency trading and stablecoins.
By November 2025, the digital yuan processed 3.48 billion transactions worth 16.7 trillion yuan, or about $2.34 trillion, across 230 million personal wallets and nearly 19 million corporate wallets.
US banking groups have taken a different view from crypto firms during the debate over stablecoin rewards. The American Bankers Association has called for strict enforcement of the GENIUS Act to prevent crypto platforms from offering reward-like incentives.
The debate unfolds as the US continues to oppose central bank digital currencies, citing risks tied to surveillance and misuse. After returning to office in January 2025, Donald Trump signed an executive order banning CBDCs in the United States.
China has moved in the opposite direction, launching a digital yuan International Operation Center in Shanghai and a cross-border payment platform to expand global reach. Despite years of pilot programs, adoption inside China has lagged behind Alipay and WeChat Pay, which control over 90% of mobile payments, due to limited incentives and privacy concerns.
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Coinbase has warned that strict limits on stablecoin rewards under US stablecoin regulation may weaken America’s global position. The concern follows China’s plan to add interest to digital yuan wallets. As global payment systems evolve, lawmakers face pressure to balance innovation with financial safeguards.
