US Risks Losing Digital Finance Edge: Coinbase Warns of China CBDC Advantage

Amid the rising competition in the global digital finance space, the United States is facing an increasing risk of losing its hold. Coinbase, the largest crypto exchange in the US, has shared this stark warning as China emerges as a strong rival.

Notably, Coinbase’s Faryar Shirzad sounded an alarm on the potential consequences of the prevailing uncertainty surrounding stablecoin regulations in the US. He warned that China’s latest CBDC initiatives have bolstered the country’s push for dominance in the digital finance space, effectively sidelining the US.

Will the US Fall Behind in the Digital Finance Race? Coinbase Warns

Coinbase’s chief policy officer, Faryar Shirzad, took to X to share concerns about the rising competition from China in the digital finance economy. He stated that the US lawmakers are giving China and other global rivals a strategic advantage by limiting rewards on US-based stablecoins. He added in the X post,

“Tokenization is the future and the GENIUS Act was a visionary move by POTUS and Congress to ensure US dollar stablecoins issued under US rules would be the primary settlement instrument of the future.”

Although the GENIUS Act has been signed into law, the bill currently prohibits stablecoin issuers from paying interest. It only allows third-party rewards, which marks a point of focus in the ongoing Senate negotiations surrounding the market structure legislation. While banks and financial institutions argue against these rewards, citing risks, crypto exchanges and platforms advocate the reward system. They claim that limiting stablecoin rewards may hamper innovation.

China’s CBDC Push: A Strategic Leap in Digital Finance

Significantly, the Coinbase executive’s warning comes in response to China’s latest decision to pay interest on its CBDC, the digital yuan. Taking effect on January 1, 2026, the People’s Bank of China is allowing commercial banks to pay interest on e-CNY holdings under a new framework.

As noted by PBOC Deputy Governor Lu Lei, under the new framework, China’s digital yuan will perform as a “digital deposit currency/.” The move is part of the country’s growing efforts to boost the e-CNY’s adoption worldwide.

However, the Coinbase executive sees this as a significant threat to the US’s dominance in the global digital finance space. He believes that addressing the concerns surrounding the GENIUS Act and stablecoin rewards has now become a matter of urgency. He noted, “If this issue is mishandled in Senate negotiations on the market structure bill, it could hand our global rivals a big assist in giving non-US stablecoins and CBDCs a critical competitive advantage at the worst possible time.”