Coinbase CEO accuses banks of blocking stablecoin competition

Coinbase (COIN) Chief Executive Brian Armstrong said any effort to reopen the GENIUS Act would cross a red line, accusing banks of using political pressure to limit competition from stablecoins and financial technology platforms.

Armstrong made the remarks in a post on X on Sunday. He said he was surprised banks could lobby Congress so openly and said Coinbase would oppose any attempt to revise crypto legislation.

He wrote that Coinbase would not allow the law to be reopened. He also said banks would eventually change their position once they recognized the business potential of stablecoins that offer interest and yield.

Armstrong said banks may later lobby in favor of allowing interest payments on stablecoins. He described current lobbying efforts as wasted and unethical.

The GENIUS Act was approved after months of negotiations. The law prohibits stablecoin issuers from paying interest directly to holders. It allows platforms and third parties to provide rewards linked to stablecoin use.

Armstrong’s comments followed a post by Max Avery, a board member and business development executive at Digital Ascension Group. Avery described why parts of the banking sector want lawmakers to revisit the statute.

Avery said proposed changes would not only bar direct interest payments by issuers. He said they would also restrict rewards more broadly, limiting indirect yield-sharing arrangements offered by platforms and third parties.

He said banks currently earn about 4 percent on reserves held at the Federal Reserve. He said consumers often receive little or no interest on traditional savings accounts.

Avery said stablecoin platforms challenge that system by sharing some of the yield with users. He said banks have framed the issue as a safety concern and a threat to community bank deposits.

He added that independent research shows no evidence of disproportionate deposit outflows from community banks.

Separately, U.S. lawmakers last week released a discussion draft focused on tax relief for stablecoin users. The proposal would exempt small stablecoin transactions from capital gains taxes.

The measure would allow payments of up to $200 in regulated, dollar-pegged stablecoins to avoid gain or loss recognition. It would also address taxation of staking and mining rewards by allowing income recognition to be deferred for up to five years.