Coinbase Warns: U.S. Risks Losing Stablecoin Dominance as China Supercharges Digital Yuan with Interest

America's crypto giant sounds the alarm—while Washington dithers, Beijing is building a programmable dollar competitor that pays you to use it.

The Digital Yuan Gets a Yield Engine

Forget static digital cash. China's central bank digital currency (CBDC) is evolving into a financial instrument, with reports confirming the integration of programmable interest features. This isn't just digitized money; it's policy-driven capital with incentives baked into its code.

Stablecoin Supremacy Isn't Guaranteed

Coinbase's warning cuts through the usual hype: technical first-mover advantage means nothing if regulatory paralysis cedes the global financial infrastructure race. The U.S. dollar's reign in crypto is backed by private stablecoins—a house of cards if a state-backed, yield-bearing alternative gains traction in cross-border trade.

A Battle for the Next Monetary Layer

The playbook is clear. China isn't just creating a digital currency; it's architecting a closed-loop economic system. Programmable interest allows for surgical monetary policy—stimulating specific sectors or demographics directly, bypassing the messy, inefficient channels of traditional finance. It's capital allocation with algorithmic precision.

The Clock is Ticking for U.S. Policy

Debates drag on in congressional committees while a strategic competitor iterates. Every quarter without clear U.S. digital asset rules isn't just missed innovation—it's conceded territory. The infrastructure for the next half-century of finance is being coded now, and the U.S., ironically, is letting bureaucracy short-circuit its own potential.

The ultimate finance jab? Wall Street might finally get some real competition—not from another bank, but from a line of code governed by a central committee. Now that's disruptive innovation.

TLDR

• China adds interest to e-CNY, steering digital yuan from cash to deposits
• Shift boosts China’s payment clout and intensifies CBDC competition
• Coinbase warns GENIUS Act curbs could blunt U.S. stablecoin edge
• Banks seek tougher reward bans as crypto groups push flexibility
• Outcome may shape innovation, dollar strength, and future flows

A new policy debate has pushed stablecoin regulation back into focus, and it has raised concerns about U.S. competitiveness. Coinbase signaled that proposed changes to the GENIUS Act could weaken the national position as global digital payments expand. The warning emerged as China advanced its digital yuan strategy with a major interest feature.

China’s Digital Yuan Shift Raises Competitive Stakes

China advanced its digital currency plan and introduced interest-bearing features for digital yuan wallets, and this shift created fresh pressure for U.S. policymakers. The People’s Bank of China confirmed that commercial banks will pay interest on e-CNY balances starting in 2026, and this transition moves the currency from digital cash toward a broader deposit model. Officials stated that the change aims to strengthen value storage and cross-border functions, and it may expand China’s role in digital payments.

Coinbase noted that China’s new framework could attract users seeking yield, and this dynamic may reshape the competitive landscape. The development arrived as global platforms continued exploring new settlement tools, and the update positioned the digital yuan as a clearer rival to stablecoin products. Analysts observed that China’s strategy now targets both retail users and banks, and it accelerates its CBDC ambitions.

The shift introduced fresh urgency for U.S. regulators, and it also placed attention on the GENIUS Act debate. Market observers noted that digital currency design choices increasingly influence payment flows, and China’s MOVE highlighted that trend. The change also prompted industry groups to reassess potential gaps in the U.S. framework.

U.S. Stablecoin Debate Intensifies Under GENIUS Act Pressure

The GENIUS Act placed strict limits on direct stablecoin interest, and lawmakers designed the law to maintain regulatory clarity. The current dispute centers on whether platforms may offer indirect rewards, and the outcome could shape future product features. Industry groups argued that expanded limits could hinder U.S. stablecoin growth as rival systems strengthen their offerings.

Coinbase warned that narrowing reward options may reduce stablecoin competitiveness, and internal lobbying efforts added new tension. Banking groups requested a broader interpretation of the ban, and they stated that reward programs could disrupt existing deposit structures. crypto organizations countered that the sector needs flexible tools, and they urged lawmakers to maintain the current language.

The debate entered a new phase as firms highlighted global pressure, and they stressed that restrictive rules may slow innovation. Coinbase maintained that stablecoin leadership supports dollar strength, and it said policy shifts must consider international developments. Lawmakers now face a decision that may shape the next phase of digital payments.