Coinbase CEO Says Reopening GENIUS Act Is ‘Red Line,’ Slams Bank Lobbying
In one of the most debated developments in crypto news, Coinbase CEO Brian Armstrong has issued a strong warning to lawmakers and financial institutions, calling the reopening of the GENIUS Act a “red line.” Armstrong accused traditional banks of lobbying Congress to restrict stablecoin rewards in a bid to protect their deposit base, a move he says threatens innovation and the future of blockchain technology.
Armstrong: “We Won’t Let Anyone Reopen GENIUS”
In a recent post on X (formerly Twitter), Armstrong criticized U.S. banks for lobbying against stablecoin reward programs, describing their actions as “unethical” and “short-sighted.” He wrote, “We won’t let anyone reopen GENIUS. The banks think they’re protecting their deposits, but one day they’ll be lobbying for stablecoin yield once they realize the size of the opportunity.”
The GENIUS Act, passed earlier this year after months of political negotiation, created a framework for stablecoin regulation in the United States. It prohibits stablecoin issuers from paying direct interest but permits exchanges and third-party platforms like Coinbase to offer users rewards or yield programs indirectly.
According to Armstrong, attempts to dilute that flexibility are being driven by pressure from banking institutions wary of customers shifting savings into higher-yielding digital alternatives. His comments have since gone viral across crypto pur communities, sparking discussions about whether Wall Street’s lobbying will slow stablecoin innovation or accelerate policy reform in favor of decentralized finance.
Banking Lobby Pushes to Restrict Rewards
Armstrong’s warning came in response to a detailed post by Max Avery, a board member at Digital Ascension Group, who explained how parts of the traditional finance industry are pressuring lawmakers to revisit the GENIUS Act. Avery said certain lobbying groups are proposing amendments that would not only ban direct interest payments but also restrict “rewards” the indirect yield-sharing mechanisms offered by crypto platforms.
He argued that banks see reward-based stablecoins as a competitive threat, as they allow users to earn a share of the yield generated from reserves, something banks rarely pass along to their customers. “Banks are calling it a ‘safety concern,’ claiming to protect community deposits,” Avery said. “But independent research shows no meaningful evidence that stablecoins cause deposit outflows from smaller banks.”
Currently, U.S. banks earn an average of 4% from reserves held at the Federal Reserve, while traditional savings accounts pay close to 0%. In contrast, stablecoin platforms like Coinbase share a portion of their yield with users, offering consumers a far more attractive alternative.
This conflict, analysts argue, lies at the heart of traditional finance’s resistance to blockchain-based yield systems: the fear of losing the low-cost deposits that sustain their lending businesses.
Lawmakers Explore New Stablecoin Tax Relief
While lobbying battles continue, other parts of Washington are moving in a more crypto-friendly direction. Last week, U.S. lawmakers introduced a new proposal aimed at reducing tax burdens for everyday crypto users.
The draft legislation, sponsored by Representatives Max Miller and Steven Horsford, would exempt up to $200 in stablecoin payments from capital gains taxes, making small crypto payments more practical for real-world use. The bill also addresses staking and mining income, allowing taxpayers to defer income recognition on such rewards for up to five years.
If passed, the measure could significantly boost stablecoin adoption among consumers and businesses, reinforcing the role of blockchain technology in everyday finance while providing mainstream legitimacy to projects like Coinbase’s expanding ecosystem.
The Bigger Picture: Stablecoins and the Future of Blockchain
Armstrong’s fiery comments have reignited broader debates within the crypto news cycle about whether regulation will spur or stunt innovation in the digital asset sector. Many crypto pur enthusiasts see the GENIUS Act as a crucial step in balancing compliance with growth, while banks continue to view yield-bearing stablecoins as disruptive forces.
As the intersection of finance and blockchain deepens, the clash between traditional banking models and decentralized platforms appears inevitable. Coinbase, already one of the largest players in digital payments, seems determined to defend that frontier.
In Armstrong’s own words, “Stablecoins are not just a financial tool, they are the future foundation of global money.”