Crypto Executives Push Congress to Allow Stablecoin Issuers to Pay Interest
Some crypto executives are reportedly pushing Congress to allow stablecoin issuers to pay interest on their U.S. dollar-pegged tokens.
The executives aim to add this provision to stablecoin bills that are being considered by the House and Senate, Reuters reported Thursday (April 3).
Currently, stablecoin issuers earn interest on the U.S. Treasuries and other cash equivalents they hold to maintain a peg on the dollar, but don’t pass any interest along to the tokens’ holders, according to the report.
Proponents of allowing issuers to pay interest on stablecoins argue that issuers should be allowed to do so because they already hold the assets and earn interest and that it is not fair that banks can share interest with consumers while crypto companies can’t, the report said.
The report cited Coinbase CEO Brian Armstrong saying, “The government shouldn’t put its thumb on the scale to benefit one industry over another.”
Opponents of the proposal counter that if interest were paid on stablecoins, customers would move deposits out of the regulated banking system, destabilizing the banking system, reducing the ability of banks to provide loans and other services, and putting taxpayers on the hook for any losses.
The report pointed to a statement from the American Bankers Association that said, “This concept is not a mere competitive concern; rather it poses significant risk to the fundamental role banks play in credit intermediation.”
This debate is happening at a time when bills that would establish a regulatory framework for stablecoins are moving through Congress, and proponents want to see this provision added to these bills, according to the report.
A bill that was approved by the House Financial Services Committee Wednesday (April 2) currently prohibits stablecoin issuers from paying interest, while a bill that was advanced by the Senate Banking Committee in March is less specific, the report said.
It was reported March 13 that the Senate’s stablecoin bill, the GENIUS Act, is on a “fast track” because it was advanced by an 18-6 vote with bipartisan support in the Senate Banking Committee and because it is a priority of President Donald Trump.
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