China authorized its commercial banks to pay interest on the digital yuan starting January 1 of this year. According to Coinbase CEO Brian Armstrong, this decision severely impacts the competitiveness of United States dollar stablecoins. The official source highlighted that this change seeks to better integrate the central digital currency into the banks’ financial balances.
Chinese commercial banks now have permission to remunerate the balances held in e-CNY digital wallets. This decision marks a deep shift in the monetary and technological strategy of the Asian giant currently. Remunerating digital balances will attract more banked users to the state payment system. In this way, China seeks to consolidate its centralized digital currency quickly through the use of these global financial and technological incentives. Additionally, local banks will use this tool to improve the efficiency of their own annual financial balances.
However, this situation highlights the clear regulatory disadvantage that technology companies in the United States face today. The GENIUS Act, signed in July 2025, prohibits stable asset issuers from offering direct yields. The North American legal framework limits the response capacity against the constant innovations of foreign powers. Therefore, yield restrictions could stagnate the local growth of digital assets linked to the dollar.
The digital yuan’s progress challenges dollar hegemony in global commerce
Additionally, the powerful US banking lobby has requested to expand the yield prohibition to third-party platforms now. They argue that digital dollar rewards could dangerously drain deposits from smaller commercial banks. Political pressure makes the evolution of digital finance difficult within the North American territory. Therefore, the traditional financial sector fears the migration of capital to ecosystems that are much more profitable and competitive today.
On the other hand, Ron Tarter, CEO of MNEE, believes that a weak dollar in 2026 will accelerate changes soon. He suggests that lawmakers will finally see stablecoins as strategic tools to preserve global sovereignty. Dollar hegemony depends on immediate technological adaptation to the growing challenges of the Asian bloc. Likewise, rigorous compliance will be key for local companies while new federal and banking guidelines are defined.
Will US regulation be able to adapt before losing its financial leadership?
Likewise, stable cryptocurrencies are evolving towards advanced models that are directly backed by real-world assets. Reeve Collins, co-founder of Tether, indicated that today’s users prioritize preserving their purchasing power. New financial designs distribute profits among holders in a much more equitable and transparent way. Therefore, global demand will migrate to assets with integrated rewards if there are no legal and attractive alternatives in the US.
Moreover, legal experts warn that a total repeal of the GENIUS Act after the elections is unlikely. Companies in the sector must assume that current prohibitive rules will remain in force during subsequent legislative periods. Regulatory uncertainty remains a constant challenge for all issuers of stable and digital currencies. Finally, the future of the ecosystem will depend on strategic adjustments that allow the nation to regain the technological leadership lost to China.
