The United States risks losing its leadership in digital finance as regulatory uncertainty continues to shape the stablecoin market. Coinbase has warned that policy delays and restrictions could weaken the country’s competitive position while China advances its digital currency strategy. Consequently, the gap between US innovation and global rivals appears to be narrowing at a critical moment. Coinbase Chief Policy Officer Faryar Shirzad has raised concerns about how stablecoin rules may influence future payment systems. He has argued that digital assets will play a central role in global settlement networks. Hence, regulatory choices made today could determine which countries control tomorrow’s financial infrastructure. While the United States debates market structure rules, China continues to move with speed and coordination. US Stablecoin Rules Face Competitive Pressure Although the GENIUS Act has become law, it limits how stablecoin issuers can offer rewards. The framework blocks issuers from paying interest directly to users. It only permits third-party incentives under specific conditions. Besides, this approach has created friction between lawmakers, banks, and crypto platforms. Banks continue to express concerns about financial stability and risk exposure. However, crypto firms maintain that reward limitations reduce product appeal and slow adoption. Additionally, industry participants believe restrictions could drive users toward foreign-issued digital assets. Consequently, stablecoin activity may migrate outside US regulatory reach. Faryar Shirzad has emphasized that global competition already shapes digital finance outcomes. He has pointed to international rivals using policy tools to attract users and liquidity. Moreover, he believes unresolved debates in Congress could weaken the US dollar’s role in future digital settlements. China Expands Digital Yuan Capabilities China has taken a different approach by expanding incentives tied to its central bank digital currency. Starting January 2026, commercial banks can pay interest on digital yuan balances. Significantly, this change positions the e-CNY as a functional digital deposit rather than a simple payment token. People’s Bank of China Deputy Governor Lu Lei has described the digital yuan as a core component of modern banking infrastructure. The framework allows banks to integrate e-CNY into savings and payment products. Moreover, interest payments could encourage broader adoption among consumers and institutions. China continues to promote cross-border trials and international use cases for the digital yuan. Hence, the currency could gain traction in trade settlement and regional finance. While adoption remains gradual, incentives may accelerate user engagement.
