US Banning Stablecoin Yields Will Benefit Other Currencies: Exec

US lawmakers deciding to limit rewards on US-issued stablecoins would give China and others a strategic advantage, warns Coinbase’s chief policy officer Faryar Shirzad. 

“If this issue is mishandled in Senate negotiations on the market structure bill it could hand our global rivals a big assist in giving non-US stablecoins and CBDCs a critical competitive advantage at the worst possible time,” the executive said in a Dec. 30 X post. 

China’s Central Bank Overhauls CBDC Strategy

The warning comes as China prepares a major overhaul of its central bank digital currency (CBDC) strategy that is aimed at boosting the adoption of the digital yuan (e-CNY).

That digital yuan has struggled to gain traction in the market despite years of pilot programs and research. In an effort to boost adoption of the token, the People’s Bank of China (PBOC) announced earlier this week that it will allow commercial banks to pay interest on client’s digital yuan holdings. This is part of a new framework that is set to take effect on Jan. 1, 2026. 

🚀 China is giving the Digital Yuan (e-CNY) a massive upgrade for 2026!
The PBOC just announced that banks will soon pay interest on CBDC holdings to drive mass adoption.

Key Highlights:
💰 Interest-Bearing: Earn interest on your digital yuan wallet.
🏦 New Status: Evolves from…

— Dollars with Prasad (@p3prasad) December 29, 2025

Under the new policy, the e-CNY will transition from functioning as digital cash to operating as “digital deposit currency,” said PBOC Deputy Governor Lu Lei. 

Debate Over Yield-Bearing Stablecoins In The US

Shirzad’s post also comes after US President Donald Trump signed the GENIUS Act into law in July. This is the first US stablecoin regulatory framework on the federal level. 

Under the GENIUS Act, stablecoin issuers are prohibited from offering yields directly to token holders. However, this same ban is not extended to third-party service providers. Critics have argued that this “loophole” allows stablecoin issuers to get around the ban. 

Coinbase, for instance, offers yields on the stablecoin USDC, which is issued by Circle.

That ban on stablecoin yields has been a point of debate in 2025, specifically with regards to how strictly the ban should be applied. 

On one hand, crypto firms argue that limiting rewards could weaken the competitiveness of US stablecoins against foreign alternatives and CBDCs. Meanwhile, banking groups are urging regulators to enforce a broad prohibition. 

In a Dec. 18 letter, the Blockchain Association, along with more than 125 crypto industry participants, urged Congress to reject the banking sector’s efforts to expand the GENIUS Act’s prohibition on stablecoin interests or yields. 

On the same day, the American Bankers Association published a letter of its own calling on lawmakers to strictly enforce the GENIUS Act’s ban on yield-bearing stablecoins. It argued that some crypto exchanges are interpreting the law in ways that allow incentives similar to rewards. The group warned that this could undermine traditional banking activity. 

USD Stablecoins Dominate The Market

While the debate around US stablecoin yields continues, tokens pegged to the US-dollar still account for the lion’s share of the market. 

Data from DefiLlama shows that the stablecoin market’s capitalization stands at about $307.95 billion. 

Stablecoin market cap (Source: DefiLlama) 

Of that amount, non-USD stablecoins only make up around $1.4 billion.

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