Coinbase CEO Warns Against Reopening GENIUS Act, Calls Bank Lobbying “Unethical”
Summary:
Coinbase CEO Brian Armstrong has issued a strong warning against attempts to reopen the GENIUS Act, a key piece of stablecoin legislation. He accuses traditional banks of using political pressure to stifle competition from fintech platforms offering yield-bearing stablecoins. The GENIUS Act currently allows third-party platforms to offer rewards on stablecoin holdings while prohibiting direct interest payments from issuers. Armstrong predicts banks will eventually embrace stablecoin yield opportunities once they recognize their potential.
What This Means for You:
- Stablecoin rewards programs may face increased regulatory scrutiny if banks succeed in lobbying efforts
- Crypto users should monitor legislative changes that could impact yield opportunities on stablecoin holdings
- Consider diversifying stablecoin holdings across multiple platforms to mitigate potential regulatory risks
- Future banking sector adoption of stablecoin yield products could lead to more competitive returns
Original Post:
Coinbase CEO Brian Armstrong said any attempt to reopen the GENIUS Act would cross a “red line,” accusing banks of using political pressure to block competition from stablecoins and fintech platforms.
In a Sunday post on X, Armstrong said he was “impressed” banks could lobby Congress so openly without backlash, adding that Coinbase would continue pushing back on efforts to revise the law. “We won’t let anyone reopen GENIUS,” he wrote.
“My prediction is the banks will actually flip and be lobbying FOR the ability to pay interest and yield on stablecoins in a few years, once they realize how big the opportunity is for them. So it’s 100% wasted effort on their part (in addition to being unethical),” Armstrong added.
The GENIUS Act, passed after months of negotiations, bars stablecoin issuers from paying interest directly but allows platforms and third parties to offer rewards.
Related: What the $310B stablecoin market reveals about crypto adoption
Bank lobbying targets stablecoin “rewards”
Armstrong’s comments came in response to a post by Max Avery, a board member and business development executive at Digital Ascension Group, who outlined why parts of the banking sector are pushing lawmakers to revisit the legislation.
Avery argued that proposed amendments would go beyond banning direct interest payments by stablecoin issuers and instead restrict “rewards” more broadly, cutting off indirect yield-sharing mechanisms offered by platforms and third parties.
Avery pointed out that while banks currently earn around 4% on reserves parked at the Federal Reserve, consumers often receive close to zero on traditional savings accounts. Stablecoin platforms, he said, threaten that model by offering to share some of that yield with users.
“They’re calling it a ‘safety concern.’ They’re worried about ‘community bank deposits,'” he wrote, adding that independent research “shows zero evidence of disproportionate deposit outflows from community banks.”
Related: The crypto events that reshaped the industry in 2025
US lawmakers propose tax relief for stablecoin payments
Last week, US lawmakers unveiled a discussion draft aimed at reducing the tax burden on everyday crypto users by exempting small stablecoin transactions from capital gains taxes. The proposal, introduced by Representatives Max Miller and Steven Horsford, would allow payments of up to $200 in regulated, dollar-pegged stablecoins to avoid gain or loss recognition.
Beyond payments, the bill targets taxation issues around staking and mining by allowing taxpayers to defer income recognition on rewards for up to five years.
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Extra Information:
Federal Reserve data on bank reserves provides context for bank earnings mentioned in the article. The FDIC’s deposit insurance information helps understand concerns about community bank stability.
People Also Ask About:
- What is the GENIUS Act? The GENIUS Act is US legislation regulating stablecoins that prohibits direct interest payments but allows third-party rewards.
- Why are banks against stablecoin rewards? Banks fear competition as stablecoin platforms offer better yields than traditional savings accounts.
- How do stablecoin rewards work? Platforms generate yield through various mechanisms like lending or staking and share portions with users.
- Are stablecoin rewards taxable? Yes, in most jurisdictions stablecoin rewards are considered taxable income.
- What’s the difference between interest and rewards? Interest comes directly from the issuer, while rewards are offered by third-party platforms.
Expert Opinion:
The battle over stablecoin regulation represents a fundamental shift in financial power dynamics. As fintech expert David Thompson notes, “Banks are fighting to protect a business model that’s becoming obsolete, while crypto platforms are building the financial infrastructure of tomorrow. The outcome of this regulatory battle will determine whether consumers benefit from financial innovation or remain trapped in outdated banking systems.”
Key Terms:
- GENIUS Act stablecoin regulation
- Bank lobbying against crypto rewards
- Stablecoin yield comparison to savings accounts
- Coinbase CEO on financial innovation
- US stablecoin tax exemption proposals
- Crypto platform reward programs
- Future of banking with stablecoins
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