China digital yuan interest move raises fears over US crypto policy

China’s decision to pay interest on its digital yuan has intensified concerns that stalled US policy could weaken the global competitiveness of American stablecoins.

Coinbase chief executive Brian Armstrong warned that incentives embedded in digital currencies are becoming a decisive factor in adoption and payments dominance.

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

Brian Armstrong said.

Armstrong cautioned that US debates over whether rewards resemble lending risk missing broader strategic implications for global finance.

He argued that reward-bearing digital assets influence liquidity, cross-border payments and everyday usage.

Rewards on stablecoins will not change lending one bit, but it does have a big impact on whether US stablecoins are competitive.

Brian Armstrong said.

China is set to begin paying interest on its digital yuan through commercial bank wallets, giving it deposit-like status.

The move follows years of pilot programmes that have processed trillions of yuan in transactions.

Analysts said incentives could determine whether digital currencies achieve scale compared with established payment platforms.

The development has renewed debate over whether the US risks ceding leadership in digital money innovation.