Faryar Shirzad Raises Critical Questions on US Stablecoin Policy as Digital Yuan Adoption Accelerates

Coinbase’s Chief Policy Officer Faryar Shirzad has publicly expressed concerns that restrictive US regulations on stablecoins could inadvertently hand Beijing a strategic advantage in the race for global payment dominance. The timing of these comments comes as China implements a significant shift in its digital currency strategy, adding yield-generating capabilities to its central bank digital currency.

Beijing Transforms Digital Yuan into Interest-Bearing Payment Vehicle

The People’s Bank of China announced this week that starting January 1, 2026, commercial banks will be authorized to offer interest on digital yuan account balances. According to PBOC Vice Governor Lu Lei, this development represents a watershed moment—transitioning the digital currency from a mere “payment medium” to a comprehensive “digital deposit product” capable of competing with traditional banking services. The interest-bearing functionality directly enhances the digital yuan’s appeal for cross-border settlements and value storage, positioning it as a more attractive alternative to foreign stablecoins in international trade.

US Policy Framework Constrains Dollar-Backed Stablecoin Innovation

The GENIUS Act, enacted in mid-2025, established baseline rules for stablecoin operations while simultaneously prohibiting direct interest payments on stablecoins themselves. Instead, the legislation permits only third-party platforms and intermediaries to structure reward mechanisms linked to stablecoin holdings. Faryar Shirzad’s alarm stems from the belief that these restrictions undermine the competitive position of dollar-denominated stablecoins precisely when other nations are removing similar barriers.

Banking Lobby Pressure Versus Market Realities

Coinbase Chief Executive Brian Armstrong has characterized proposed amendments to the GENIUS Act as a “hard boundary issue,” alleging that traditional financial institutions are actively lobbying Congress to maintain restrictions on stablecoin yields. Armstrong’s assessment suggests that banks fear disintermediation—the potential exodus of deposits toward yield-bearing stablecoin alternatives. However, he contends this defensive posture is shortsighted and predicts that banking institutions will ultimately face market pressure to compete on yield offerings themselves.

Strategic Implications for Global Payments

The divergence in regulatory approaches between the US and China underscores a fundamental competition in payment system architecture. While American policymakers remain cautious about interest-bearing stablecoins, Chinese regulators are actively enhancing the digital yuan’s functionality to capture international transaction flows. Faryar Shirzad’s position reflects a growing consensus within the crypto industry that inflexible policy frameworks may cede ground to competitors in the high-stakes arena of next-generation payment infrastructure.