US Stablecoin Rewards Ban Could Boost China’s Digital Yuan
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Hassan Shitu
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Coinbase has warned against a renewed push in Washington to limit how much stablecoin it rewards users with.
Faryar Shirzad, Coinbase's chief policy officer, raised concerns in a post on X, arguing that restrictions around rewards could reduce the foreign appeal of dollar-backed stablecoins.
He said the issue is particularly worrying as rival systems move to make their digital currencies more competitive.
Shirzad pointed directly to China's recent moves on the central bank's digital currency, the digital yuan, to how quickly the global environment is changing.
As China Sweetens Digital Yuan, Coinbase Questions US Stablecoin Limits
Earlier this week, the People's Bank of China unveiled a framework that will allow commercial banks to charge interest on balances held in digital yuan wallets starting January 1, 2026.
Lu Li, deputy governor of the PBOC, said the change would move e-CNN beyond its original role as a digital version of cash and integrate it into banks' asset and liability operations.
In the United States, the discussion is taking place against the backdrop of the Genius Act, which was signed into law in July as the framework for the country's first universal stablecoin.
The law sets reserve and compliance requirements for providers and prohibits them from paying direct interest, while still allowing platforms and third parties to offer rewards related to the use of stability coins.
Shirzad warned that June's negotiated changes to the broader market structure bill would increase the balance even further, potentially giving non-US stablecoins and CBCCs a competitive edge.
Industry observers say the pressure to revisit the law is coming from traditional banking interests.
According to crypto policy analyst Max Avery, banks currently earning roughly 4% on reserves held at the Federal Reserve have little incentive to see that yield widely shared.
Stablecoin platforms, on the other hand, have argued that passing some of the rewards to users is part of what makes the products attractive.
China will push further on the development of digital yuan as private applications still dominate.
China continues to develop CBDC despite banning cryptocurrency trading and stablecoins domestically. The latest action plan, which covers 2026 to 2030, seeks to expand the national use of the digital yuan and build supporting infrastructure.
In the year By November 2025, e-CNI processed 3.48 billion transactions worth 16.7 trillion yuan or $2.34 trillion through 230 million personal wallets and nearly 19 million corporate wallets.
The introduction of interest-bearing digital yuan wallets is seen as an attempt to address long-standing grievances.
Adoption has lagged behind private payment platforms such as Alipay and WeChat Pay, which dominate more than 90% of China's mobile payment market.
Despite years of pilot programs, users cited a lack of incentives and ongoing privacy concerns as reasons for sticking with existing apps.
Following the policy's announcement, Chinese investors poured more than $188 million into digital yuan stocks, fueling market activity.
At the same time, authorities have warned of scams using the new on-demand feature, highlighting the trust issues the system still faces.
The United States, in particular, has taken a different approach. In January, President Donald Trump signed an executive order barring federal agencies from issuing or supporting central bank digital currencies.
The administration has expressed support for privately issued and regulated stablecoins (Statcoins) as the preferred digital dollar model, citing risks to financial stability, personal privacy and national sovereignty.
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