Cryptocurrency Executives Advocate for Interest Payments on Stablecoins
Crypto industry leaders are urging U.S. lawmakers to allow stablecoin issuers to offer interest payments to token holders, a move they argue would make digital assets more competitive with traditional bank deposits. Currently, stablecoins such as Tether (USDT) and Circle’s USDC are pegged to the U.S. dollar and backed by reserves like U.S. Treasuries, which generate returns that issuers keep rather than distributing to users. Executives believe that enabling interest payments would enhance stablecoins' appeal and further integrate them into the mainstream financial system.
The push comes as Congress debates new legislation to regulate stablecoins, with a proposed bill currently prohibiting issuers from paying interest. Opponents, including the American Bankers Association, argue that allowing such payments could encourage consumers to move funds out of traditional banks, potentially destabilizing the financial sector. Lawmakers remain divided, with the House bill restricting interest payments while the Senate's version is more open-ended, leaving room for future policy changes.
The White House has set a goal to finalize stablecoin regulations by August 2025, and the outcome of this debate could significantly shape the future of digital finance. If stablecoin issuers gain the ability to offer interest, it could challenge traditional banks and drive further innovation in the crypto sector. However, regulators must strike a balance between fostering financial innovation and ensuring stability in the broader economy.
