China’s Interest-Bearing Digital Yuan Piles Pressure on US Stablecoin Rules
China allowing interest on its digital yuan is pressuring the US to reconsider yield bans in its stablecoin regulations.Summary
China's decision, effective January 1st, to permit commercial banks to pay interest on digital yuan (e-CNY) wallets is intensifying the debate in Washington regarding the competitiveness of US dollar stablecoins under the GENIUS Act. Coinbase CEO Brian Armstrong warned this move grants China a significant competitive advantage. The GENIUS Act, enacted in July 2025, established a federal framework for dollar-pegged stablecoins but explicitly bans issuers from paying any form of interest or yield. Banks have lobbied to extend this ban to third-party platforms, fearing deposit siphoning, while crypto executives argue that banning stablecoin yields hinders US dollar competitiveness and benefits China's CBDC. Industry leaders suggest that in a potentially weaker dollar environment, stablecoins are shifting focus to preserving purchasing power, driving demand for designs that share yield with users. While a full repeal of the GENIUS Act after the 2026 midterms is deemed unlikely, regulatory enforcement risks remain, prompting firms to rigorously document compliance.
(Source：Cointelegraph)