China’s move to pay interest on the digital yuan is colliding with the GENIUS Act’s ban on stablecoin yield, intensifying questions over whether US digital dollars can stay competitive.
China’s move to let banks pay interest on digital yuan wallets from Jan. 1 is sharpening the debate in Washington over whether United States dollar stablecoins are being left structurally uncompetitive by the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act’s ban on yield.
The change allows commercial banks to pay interest on balances held in e‑CNY wallets, with Chinese officials framing it as a way to better integrate the central bank digital currency (CBDC) into bank balance sheets.
Coinbase CEO Brian Armstrong warned in an X post on Jan. 7 that the decision gives China a “competitive advantage” over US dollar stablecoins and has a “big impact on whether US stablecoins are competitive.”
