Coinbase CEO Takes a Stand: Defends China’s CBDC While U.S. Stablecoin Rewards Spark Political Battle

Coinbase's chief just threw a curveball in the global digital currency race—publicly backing China's central bank digital currency project as Washington lawmakers brawl over stablecoin regulations.

The Digital Yuan Gambit

While U.S. regulators debate reward programs for dollar-pegged tokens, China's CBDC is sprinting ahead. The state-backed digital yuan isn't just a payment rail—it's a strategic tool reshaping cross-border finance and challenging dollar dominance. Its architecture bypasses traditional SWIFT networks, offering a glimpse into a future where monetary policy is programmable and surveillance is baked into the ledger.

Washington's Regulatory Quagmire

Stateside, the stablecoin fight centers on consumer incentives and banking charters. Political factions clash over whether algorithmic tokens deserve the same protections as bank-issued ones—a debate that feels increasingly archaic as other nations deploy fully functional digital currencies. The delay isn't just bureaucratic; it's ceding ground in the defining financial infrastructure battle of the decade.

Geopolitical Code Warfare

This isn't about technology preferences—it's about monetary sovereignty. China's CBDC advances while America's regulatory machinery grinds through committee hearings. One system prioritizes control and expansion, the other remains tangled in legacy finance debates. When historians trace the digital currency cold war, 2026 may be remembered as the year the trenches were dug.

Sometimes the most revolutionary code isn't written in Silicon Valley—it's mandated by central banks while venture capitalists argue about yield percentages.

TLDR

• Brian Armstrong praised China’s digital yuan interest policy as a competitive advantage for ordinary users.
• He argued that the United States should allow stablecoin rewards to benefit consumers without harming bank lending.
• Chinese analysts stated that the digital yuan is not a stablecoin and the interest program addresses low adoption rates.
• The GENIUS Act permits platforms like Coinbase to offer rewards but prevents issuers from paying direct interest.
• Banking groups are pressuring regulators to close the rewards provision they claim threatens traditional lending capacity.

Coinbase CEO Brian Armstrong has praised China’s central bank digital currency (CBDC) policy, sparking debate during an ongoing regulatory fight. He supported China’s MOVE to offer interest on its digital yuan while defending U.S. stablecoin rewards threatened by banking lobby pressure. His remarks drew criticism and raised questions about timing and motives.

Armstrong Cites China CBDC to Defend U.S. Stablecoin Rewards

On January 8, Armstrong posted on X, praising China’s interest model for its digital yuan, calling it a “competitive advantage.” He argued that allowing interest-like rewards on U.S. stablecoins WOULD support consumers and promote innovation. “We are missing the forest through the trees in the U.S.,” he wrote.

China has decided to pay interest on their own stablecoin, because it benefits ordinary people, and they recognize it as a competitive advantage.

I worry we are missing the forest through the trees in the U.S. Rewards on stablecoins will not change lending one bit – but it does… https://t.co/nrpa8eSKUs

— Brian Armstrong (@brian_armstrong) January 7, 2026

Armstrong said these rewards help regular people and don’t harm traditional lending, urging regulators to let markets decide freely. However, Chinese analysts dismissed the comparison, stressing that China’s digital yuan is a central bank instrument, not a private stablecoin. They noted that China’s interest program responds to low adoption, not competitive strength.

Crypto commentator Phyrex clarified that interest on the digital yuan is subsidized by commercial banks, not China’s central bank. He said that the interest rates remain below demand deposit levels and are intended to boost digital yuan usage. Armstrong’s interpretation, according to critics, misrepresents the policy’s true purpose and context.

GENIUS Act Spurs Clash Between Coinbase and U.S. Banks

The GENIUS Act passed in July 2025 allows platforms to offer yield-sharing on stablecoins, though it bars issuers from direct interest payments. This exception benefits companies like Coinbase that offer “rewards” without violating interest bans. However, U.S. banking groups now seek to eliminate this flexibility through new regulatory proposals.

In November, the American Bankers Association and 52 state associations sent a letter asking the Treasury to close what they call a “loophole.” They claimed that stablecoin rewards could drain bank deposits and risk up to $6.6 trillion in lending. Banks want restrictions extended to platforms partnering with stablecoin issuers.

More pressure followed on January 7, when over 200 community bank leaders wrote to the Senate with similar demands. They asked lawmakers to apply the same rules to affiliates and partners of stablecoin issuers. These efforts challenge Coinbase’s ability to maintain a key revenue stream under the current rules.

Armstrong Draws Red Line as Lobbying Intensifies

Armstrong responded sharply on December 26, warning against any rollback of the GENIUS Act’s protections for platforms. He said banks earn about 4% on reserves at the Federal Reserve while offering near-zero to customers. He accused them of “mental gymnastics” for framing rewards programs as financial risks.

His comparison to China, though challenged, appears aimed at showing global momentum for digital currency incentives. Armstrong suggests the U.S. should not fall behind on offering consumer benefits. The appeal to China’s policy positions Coinbase in opposition to traditional banking power.

While Armstrong’s framing of China CBDC policy faces scrutiny, his broader argument remains directed at preserving platform-level stablecoin rewards. The debate now shifts to lawmakers considering whether platforms should retain this exemption. Discussions continue as the Senate reviews the latest letters from banking leaders.