Coinbase is intensifying its confrontation with traditional financial institutions over the burgeoning issue of stablecoin rewards. CEO Brian Armstrong expressed his concerns this week regarding the actions of banks, which he contends are trying to limit consumer benefits in the crypto space. On social media platform X, Armstrong stated, “Hypocrisy from banks is causing problems for crypto again,” emphasizing that banks aim to eliminate reward programs associated with stablecoin holdings.
This statement comes amid increasing lobbying from various banking sectors against these stablecoin reward initiatives. A coalition including the American Bankers Association (ABA) released a letter in August accusing cryptocurrency firms of exploiting a legislative gap following the enactment of the GENIUS Act. Signed into law by former President Donald Trump in July, this legislation prohibits stablecoin issuers from providing interest to users. However, it does not specifically address cryptocurrency exchanges. The letter termed this an “loophole” that lawmakers should rectify in upcoming cryptocurrency regulation efforts.
Banking institutions argue that allowing companies to offer stablecoin rewards could lead to significant deposit withdrawals from banks, adversely affecting their lending capabilities. A Treasury Department analysis cited in their letter projected that interest payments linked to stablecoin accruals could trigger an alarming $6.6 trillion in deposit outflows.
Contrary to the banks’ narrative, Armstrong contends that their aggressive stance is aimed at stifling competition, ultimately harming consumers in the U.S. “Competition is good for consumers,” he declared. “They’re just mad that they’re losing. Big banks don’t need another bailout; they need better products.”
To further advocate for this cause, Armstrong took his campaign to Capitol Hill. He posted videos from his discussions with senators, urging the cryptocurrency community to engage with lawmakers. He also promoted a dedicated website, “No More Bailouts,” urging citizens to communicate their opposition to the banks’ stance.
Coinbase’s official account echoed Armstrong’s sentiments, asserting that if credit card rewards remain permissible, then crypto rewards should also be safeguarded.
Additionally, the Blockchain Association, another pivotal player in the cryptocurrency industry, joined forces with Coinbase in this effort. On the same day, they shared a letter directed to lawmakers, highlighting the advantages of stablecoins. They stated, “Stablecoins are not a risk to be contained – they are an upgrade to a system that has long underserved consumers,” citing benefits such as 24/7 settlement, lower transaction costs, and innovative credit models that circumvent outdated banking practices.
Legislation regarding the cryptocurrency market structure is still evolving. The House has already passed its version called the CLARITY Act, while the Senate’s proposal, known as the Responsible Financial Innovation Act of 2025, remains under committee review. Both bills will need to be reconciled before reaching the president’s desk for signing.
As the debate heats up, it becomes increasingly clear that the clash between cryptocurrency innovations and traditional banking practices will shape the future landscape of finance. Stakeholders on both sides of the argument are gearing up for what could be a defining moment for the regulatory approach to digital assets in the United States.
