In the evolving ecosystem of digital finance, a Coinbase (NASDAQ:COIN) executive has raised alarms about potential U.S. policy missteps that might undermine America’s position in global monetary innovation. Faryar Shirzad, the cryptocurrency exchange’s chief policy officer, highlighted how limiting incentives on American stablecoins could inadvertently boost competitors abroad, particularly as China ramps up efforts to make its central bank digital currency more appealing.
Shirzad’s concerns, shared via a social media post on December 30, 2025, come amid ongoing discussions in Washington over the treatment of yields for U.S. dollar-backed stablecoins under recent legislation.
For those who misunderstand what’s at stake in the debate on offering rewards on US-issued stablecoins under the GENIUS Act, a sobering and timely announcement from the People’s Bank of China that they plan to pay interest on the Digital Yuan. 🇨🇳🇨🇳
Tokenization is the future and… pic.twitter.com/stg8ffKzT7
— Faryar Shirzad 🛡️ (@faryarshirzad) December 30, 2025
He pointed to Beijing’s latest announcement as a wake-up call, noting that the People’s Bank of China (PBOC) plans to introduce interest payments on its digital yuan, known as the e-CNY, starting January 1, 2026.
This move marks a significant pivot for the world’s first major CBDC, transforming it from a simple digital cash equivalent into an interest-bearing asset akin to bank deposits.
Commercial banks operating e-CNY wallets will offer returns based on prevailing demand deposit rates, potentially around 0.05%, in a bid to accelerate user adoption after nearly a decade of pilots that have yielded limited consumer enthusiasm.
The e-CNY, launched in trials as early as 2014, has faced challenges in gaining traction beyond government-mandated uses, such as salary payments for public workers.
Despite widespread availability through apps and integration with platforms like WeChat Pay, everyday transactions remain low, with the currency often criticized for lacking incentives compared to traditional banking or private digital wallets.
By enabling interest accrual, China aims to position the digital yuan as a more competitive store of value, potentially drawing in retail users and expanding its role in cross-border payments amid escalating geopolitical tensions.
Shirzad framed this development against the backdrop of the U.S. GENIUS Act, a landmark bill signed into law earlier in 2025 that creates a federal regulatory framework for payment stablecoins—digital tokens pegged to the dollar and backed by high-quality reserves like cash and short-term Treasuries.
The legislation allows banks, nonbanks, and approved entities to issue these assets, emphasizing their use as efficient settlement tools rather than investment vehicles.
However, a key provision prohibits issuers from offering interest or rewards tied to holdings, a measure intended to prevent speculative behavior and maintain financial stability.
This has sparked heated debate, with banking groups advocating to close any loopholes that might allow indirect yields, while crypto advocates argue such restrictions stifle innovation.
According to Shirzad, the GENIUS Act represented forward-thinking leadership from the President and Congress to cement U.S. dollar stablecoins as the dominant medium for future tokenized transactions.
Yet, he cautioned that fumbling the issue during Senate talks on a broader market structure bill could provide “a big assist” to foreign alternatives, including non-U.S. stablecoins and CBDCs like the e-CNY.
He criticized lobbyists from established financial players for resisting change, urging negotiators to prioritize the dollar’s global supremacy over protecting incumbents.
This tension underscores a broader rivalry in digital money. As tokenization—converting real-world assets into blockchain-based forms—gains momentum, yielding stablecoins could attract more users to decentralized finance ecosystems.
China’s latest upgrade, by contrast, integrates the e-CNY more deeply into its controlled banking system, potentially enhancing surveillance capabilities while boosting utility.
For the U.S., Shirzad’s warning serves as a reminder: in the race for digital economy dominance, hesitation on incentives might allow rivals to pull ahead, eroding the dollar’s longstanding role as the world’s reserve currency.
With adoption metrics for the e-CNY poised for a potential surge in 2026 and beyond, American policymakers now face mounting pressure to adapt without compromising regulatory safeguards.
