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Coinbase CEO Brian Armstrong is calling for clear regulatory guidelines on interest-bearing stablecoins, arguing that an onchain framework could unlock new opportunities for financial innovation while ensuring consumer protection. His advocacy comes amid increasing demand for stablecoins that generate yield, a feature that could transform the way digital assets are used in mainstream finance.
Stablecoins, which are typically pegged to fiat currencies like the U.S. dollar, have become essential tools for payments, remittances, and decentralized finance (DeFi). However, regulatory uncertainty has hindered the development of interest-bearing versions, which could allow users to earn passive income on their holdings through blockchain-based mechanisms.
Armstrong believes a well-defined legal framework would provide much-needed clarity for both issuers and users. In his view, stablecoins that generate yield should have transparent backing, strict reserve requirements, and compliance with existing financial regulations. Such an approach, he argues, would encourage institutional adoption while maintaining the core principles of stability and security.
The push for regulation comes as some stablecoin issuers experiment with interest-bearing models, allowing users to earn returns by holding their tokens in smart contracts or staking protocols. However, without clear oversight, concerns around risk exposure, investor protection, and systemic stability remain.
Armstrong’s stance aligns with broader discussions in the U.S. and globally, where policymakers are working to establish comprehensive rules for stablecoins. Recent proposals from lawmakers and financial regulators suggest that interest-bearing digital assets could fall under securities or banking regulations, potentially reshaping the landscape for both crypto-native firms and traditional financial institutions.
As the debate over stablecoin legislation continues, Armstrong’s advocacy highlights the growing demand for regulatory clarity that balances innovation with investor protection. His call for an onchain solution could influence upcoming policy discussions, shaping the future of digital finance.
