Brian Armstrong Accuses Banks of Blocking Stablecoin Competition
A growing fight over stablecoin regulation is spilling into public view, with Brian Armstrong drawing a hard line against any effort to rewrite recently passed legislation.
The Coinbase chief warned that reopening the GENIUS Act would signal an escalation, accusing traditional banks of using political influence to blunt competition from crypto-native financial products.
Key takeaways
- Brian Armstrong called reopening the GENIUS Act a regulatory “red line”
- He accused banks of lobbying Congress to restrict stablecoin rewards
- The dispute centers on limiting indirect yield-sharing, not issuer-paid interest
- Armstrong said Coinbase will actively resist any attempt to revise the law
- The debate highlights rising tensions between banks and stablecoin platforms
Armstrong said attempts to amend the law are less about consumer protection and more about preserving incumbent advantages. In his view, banks are pressuring lawmakers to prevent stablecoin platforms from offering rewards that resemble interest — even when those rewards come from third parties rather than the issuers themselves. He described such efforts as unethical and vowed that Coinbase would actively resist any rollback.
Exactly – I’m actually impressed the banks can lobby for this with a straight face and not get kicked out of senator’s offices. It takes some serious mental gymnastics.
We won’t let anyone reopen GENIUS. Red line issue for us. And will keep advocating for our customers and the… https://t.co/6EfF2oBn5A
— Brian Armstrong (@brian_armstrong) December 26, 2025
Stablecoin rewards become the real battleground
The GENIUS Act, finalized after prolonged negotiations, draws a distinction between direct interest paid by stablecoin issuers and rewards offered through platforms or intermediaries. While issuers are barred from paying yield, exchanges and fintech services can still share returns with users — a structure that Armstrong says is now under attack.
Industry executive Max Avery has argued that proposed revisions would go much further than originally intended. According to Avery, some banking groups want to eliminate not just issuer-paid interest, but also indirect reward mechanisms that allow consumers to benefit from yields generated elsewhere in the financial system.
The economic incentive is clear. Banks currently earn meaningful returns on reserves held at the Federal Reserve, while many depositors receive little to nothing on standard savings accounts. Stablecoin platforms that pass part of that yield to users challenge this spread, threatening a long-standing profit model. Claims that such platforms endanger community banks, Avery noted, are not supported by data showing widespread deposit flight.
A short-term fight over a long-term shift
Armstrong has suggested that the current resistance is temporary. He predicts banks will eventually reverse course and seek the ability to offer yield-bearing stablecoins themselves once the scale of the opportunity becomes undeniable. In that sense, he sees the lobbying push as both shortsighted and counterproductive.
The debate comes as lawmakers simultaneously explore ways to make stablecoins more practical for everyday use. A separate proposal introduced in Congress would exempt small, dollar-denominated stablecoin payments from capital gains taxes, aiming to remove friction for routine transactions. The same draft also addresses long-standing tax issues around staking and mining rewards by allowing deferred income recognition.
Taken together, the developments highlight a regulatory crossroads. As stablecoins move deeper into mainstream finance, the question is no longer whether they will compete with banks, but how aggressively incumbents will try to shape the rules of that competition. For Armstrong, reopening the GENIUS Act would not be a technical adjustment — it would be a signal that the fight has entered a more confrontational phase.
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Alexander Zdravkov is a person who always looks for the logic behind things. He has more than 3 years of experience in the crypto space, where he skillfully identifies new trends in the world of digital currencies. Whether providing in-depth analysis or daily reports on all topics, his deep understanding and enthusiasm for what he does make him a valuable member of the team.
