China's Decision To Pay Interest On Digital Yuan Gives Them Competitive Advantage Over The US, Says Brian Armstrong: 'Rewards Benefit Ordinary People'

Coinbase Global Inc. (NASDAQ:COIN) CEO Brian Armstrong expressed concerns on Wednesday over the competitiveness of dollar-pegged stablecoins in light of China’s decision to pay interest on its central bank digital currency.

Armstrong Questions Policymakers

In an X post, Armstrong argued that China’s move to pay interest on its official digital currency, Digital Yuan, gives it a “competitive advantage.”

“Rewards [or even paying interest] benefits ordinary people just like community lending does. We have to let the market do both,” Armstrong said.

The cryptocurrency mogul said the U.S. is “missing the forest through the trees” and risks losing the competitive edge if policymakers restrict rewards on stablecoins.

A Game Changer For China?

Armstrong’s remarks come after Chinese commercial banks began paying interest on their CBDC effective Jan. 1, with the yield proportional to the amount of the digital currency clients hold, as reported by Reuters.

Note that CBDCs, unlike stablecoins like Tether (CRYPTO: USDT) and USDC (CRYPTO: USDC), are controlled by a central entity, whose blockchain can only be viewed and engaged with by a select group of financial institutions.

The Legislative Roadblock

Yield payments on stabecoins have emerged as a key stumbling block impeding the passage of the cryptocurrency market structure bill, a key piece of legislation championed by industry figures like Armstrong.

The Democrats have expressed concern that interest or yield payments on stablecoin balances could potentially draw deposits away from the banking system, particularly from community banks.

Armstrong’s concerns also coincided with World Liberty Financial, a Trump family-linked business, applying for a national banking license to issue and custody its dollar-pegged World Liberty Financial USD (USD1) stablecoin 

Price Action: Coinbase shares gained 0.19% in after-hours trading after closing 1.85% lower at $245.93 during Wednesday’s regular trading session, according to data from Benzinga Pro. The stock has slipped 5.42% over the last year.

Benzinga’s Edge Stock Rankings indicate that COIN maintains a weaker price trend over the short, medium and long terms. How does it compare with Strategy Inc. (NASDAQ:MSTR) and other cryptocurrency-linked stocks? Find out everything here.

Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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