Coinbase Warns: Digital Dollar Policy Risks Losing Ground to e-CNY

Coinbase’s Chief Policy Officer, Faryar Shirzad, issued a stark warning that the U.S. risks conceding dominance in digital finance to China over proposed stablecoin regulations.

The alert comes as the People’s Bank of China (PBoC) announced it will permit interest payments on its digital yuan (e-CNY) starting January 1, 2026.

The geopolitical issue centers on the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.

The current legislation, a key framework for regulating stablecoins in the U.S., prohibits issuers from paying interest directly to holders.

Shirzad argues this restriction creates a critical competitive disadvantage for U.S. dollar-pegged stablecoins.

China’s decision effectively transforms the e-CNY from a simple payment tool into a full-fledged savings asset, enhancing its appeal for domestic and international adoption.

The PBoC’s move will integrate e-CNY balances into commercial banks’ asset-liability management, with holdings also covered by deposit insurance.

Shirzad cautioned that mishandling the rewards issue in ongoing Senate negotiations could hand a significant advantage to non-U.S. stablecoins and central bank digital currencies (CBDCs).

The debate pits crypto advocates against banking incumbents. The American Bankers Association has called for strict enforcement of the interest ban, arguing that reward programs could undermine traditional banking.

Conversely, the Blockchain Association and other industry players contend that the restrictions stifle innovation and cede ground to international rivals.

The Global Implications of Digital Dollar Policy

The conflict is not merely about consumer rewards. It is about the future architecture of global digital settlement.

An interest-bearing sovereign digital currency like the e-CNY presents a direct challenge to the utility of non-interest-bearing U.S. dollar stablecoins as a reserve asset for international corporations and financial institutions.

If U.S. policy makes its digital dollar less attractive, capital and innovation will flow toward rails where yield is possible.

This threatens to erode the network effects that have made USD-backed stablecoins the dominant medium for on-chain value transfer, potentially impacting liquidity, trading volumes, and the dollar’s primacy in the next generation of finance.

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