Company Coinbase CPO Mr. Faryar Shirzad Warns US Could Hand China a Major Advantage in Stablecoins

Overview: In a critical warning to lawmakers, Mr. Faryar Shirzad, Chief Policy Officer at Company Coinbase, argued that proposals to prohibit interest payments on stablecoins could unintentionally grant a lasting competitive edge to global rivals — most notably Company People's Bank of China and its Digital Yuan (e-CNY). The debate has surged as regulators, banks, and crypto executives clash over the future structure of USD-pegged tokens and whether the United States will preserve its lead in tokenized dollar settlement.

What Mr. Shirzad said: Mr. Faryar Shirzad warned Congress that blocking interest on payment-purpose stablecoins risks undermining the legislative gains made by the GENIUS Act this year — a framework intended to ensure that US-dollar stablecoins issued under US rules become the primary settlement instrument of the future. He described tokenization as a transformative trend and labeled the GENIUS Act as a "visionary" stride toward maintaining dollar primacy. However, he cautioned that recent moves by China to pay interest on its CBDC could change competitive dynamics in a way that penalizes US policy missteps.

China's competitive move: According to reporting by Bitcoinist, Company People's Bank of China plans to allow commercial banks that manage Digital Yuan wallets to pay interest to holders of e-CNY starting January 1, 2026. Deputy Governor Lu Lei outlined a framework equating digital currency holdings with bank deposits, which would legally permit interest payments and effectively make the CBDC a yield-bearing instrument in certain contexts.

Why this matters: If the US Senate accepts banking-led proposals to extend a ban on stablecoin interest to exchanges and other intermediaries, critics like Mr. Faryar Shirzad, Mr. Brian Armstrong (CEO of Company Coinbase), and Mr. Jake Chervinsky (Chief Legal Officer at Company Variant) argue that USD-denominated tokens would become less competitive globally. Mr. Jake Chervinsky framed the issue as one of national security, warning that stripping stablecoins of market competitiveness could surrender the advantage to non-US stablecoins and CBDCs.

Banking sector's position: US banking associations have pushed back, claiming interest payments distort market dynamics and risk undermining credit creation. They urged the Senate Banking Committee to close perceived loopholes in the GENIUS Act by extending prohibitions to exchanges, brokers, and other intermediaries. The banking lobby frames the change as protecting traditional deposit and lending models from nascent tokenized instruments.

Counterarguments from crypto executives: Industry leaders reject the idea that interest-bearing stablecoins would destroy bank lending. Mr. Faryar Shirzad and others say the banking narrative "ignores reality" and risks creating an uncompetitive regulatory moat favoring incumbents. They emphasize that stablecoins must remain attractive and functional in global markets to secure dollar primacy and preserve US financial leadership in a tokenized future.

Wider implications: The policy choices made in upcoming Senate negotiations could have long-term consequences. A prohibition that limits interest-bearing incentives for USD stablecoins may push users toward foreign stablecoins or yield-bearing CBDCs such as the Digital Yuan, tilting settlement flows and innovation outside US jurisdiction. Conversely, preserving the ability for market participants to offer competitive rewards could bolster US-issued stablecoins' global standing.

Conclusion: This debate sits at the intersection of technology, regulation, and geopolitics. As the US weighs safeguards against perceived financial risks, lawmakers must also consider the strategic cost of ceding market advantages to state-backed alternatives. In Mr. Shirzad's framing, protecting the primacy of the dollar and the US financial system requires nuanced policy that balances risk mitigation with competitiveness — otherwise the US risks handing rivals a critical advantage at a pivotal moment.