GENIUS Act Debate Raises Concerns Over US Dollar Competitiveness in Digital Payments
A senior executive at Coinbase has cautioned that potential changes to the US stablecoin regulatory framework could weaken the global standing of US dollar–backed stablecoins, at a time when China is accelerating the rollout of its digital yuan with new features designed to attract users and institutions.
The warning centers on ongoing debate around the GENIUS Act, a law passed earlier this year that set compliance and reserve standards for stablecoin issuers. While the act prohibits issuers from paying direct interest, it allows platforms and third parties to offer user rewards linked to stablecoin activity. According to Coinbase’s chief policy officer, reopening this issue in Senate negotiations risks undermining the appeal of dollar-based stablecoins globally.
At the same time, China’s central bank has announced a major shift for its digital yuan (e-CNY). Beginning January 1, 2026, commercial banks will be permitted to pay interest on digital yuan wallet balances, transforming the e-CNY from a simple cash substitute into a deposit-like digital currency integrated into bank balance sheets. Chinese officials have framed this as a move toward broader use in value storage and cross-border payments.
Industry voices warn that restricting stablecoin rewards could hand non-US stablecoins and central bank digital currencies a competitive edge, especially as banks lobby to protect traditional deposit models. Coinbase leadership has described attempts to revise the GENIUS Act as a “red line,” arguing that innovation should not be curtailed to preserve legacy banking advantages.As global competition over digital money intensifies, the debate highlights a critical policy crossroads.
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