Coinbase CEO Brian Armstrong addresses USDC rewards and banking regulations

Brian Armstrong wants you to know that the yield you earn on USDC through Coinbase is not bank interest. It’s a distinction that sounds like semantics until you follow the money, and the lobbying dollars, downstream. The Coinbase CEO has publicly pushed back against banking industry efforts to restrict stablecoin rewards programs, arguing that what Coinbase offers its users is fundamentally different from a savings account. The rewards, which have ranged from 3.75% to 4.5% depending on user status, are funded by interest earned on short-term US Treasuries through Coinbase’s revenue-sharing arrangement with Circle, the company that issues USDC. Treasuries, not deposits The mechanics matter here. When users hold USDC on Coinbase, the underlying reserves backing those stablecoins are parked in short-term US government debt. The interest generated on those reserves flows back to Coinbase through its deal with Circle, and Coinbase passes a portion along to users as rewards. Armstrong has leaned into this distinction as a core part of his argument against regulatory efforts to curtail the practice. His framing positions banks as incumbents using government intervention to protect their d...