Coinbase CEO Brian Armstrong believes the United States could see a major economic boost if lawmakers update stablecoin regulations to allow users to earn on-chain interest.

In a recent post on X, Armstrong highlighted how dollar-backed stablecoins are gaining traction, but a key missing piece—on-chain interest—could unlock even greater benefits for both users and the broader economy.

Unlocking the Full Potential of Stablecoins

Stablecoins have already transformed digital finance by making fiat currencies more accessible, but Armstrong argues that their potential remains untapped. He emphasizes that enabling on-chain interest would turn stablecoins into interest-bearing accounts, increasing their utility and appeal.

“Stablecoins have already found product market fit by digitizing the dollar and other fiat currencies, but we haven’t unlocked a critical piece of the puzzle for the average person and the US economy: on-chain interest,” Armstrong wrote.

This functionality would allow stablecoin holders to earn returns directly from reserve assets, mirroring traditional savings accounts but with the efficiency of blockchain technology.

Economic Benefits and Strengthening Dollar Dominance

Armstrong points out that stablecoins are already significant holders of US Treasury bills. If on-chain interest were legalized, it could lead to even greater adoption, reinforcing the dollar’s dominance in the digital age.

“The US economy wins,” he stated. “More yield in consumers’ hands means more spending, saving, and investing—fueling economic growth across local economies. Without on-chain interest, the US misses out on billions more USD users and trillions in potential cash flows.”

By making stablecoins more attractive, Armstrong suggests that global users would increasingly opt for USD-backed digital assets, strengthening the US financial system.

Regulatory Roadblocks

Despite the clear advantages, existing laws currently prevent stablecoin issuers from offering interest-bearing products without facing complex securities regulations. Armstrong argues that stablecoins should be treated similarly to traditional savings accounts, without unnecessary restrictions.

“The tech is all there, but the law hasn’t caught up,” he explained.

With lawmakers debating stablecoin legislation, Armstrong’s push for on-chain interest signals a crucial moment for crypto regulation in the US. If Congress moves forward, stablecoins could revolutionize digital finance and further integrate the US dollar into the global digital economy.

Would you like any tweaks to the tone or formatting?