Coinbase CEO Brian Armstrong has called on US lawmakers not to reopen the recently passed GENIUS Act. According to him, any changes to the text would risk reducing competition in the stablecoin market. In particular, he accuses the big banks of exerting increasing pressure on Congress in order to weaken the law and preserve their own interests. These statements come as debate intensifies in the United States over the regulatory framework applicable to stablecoins.
In brief
- Brian Armstrong says reopening the GENIUS Act would harm competition in the stablecoin market and delay progress made after months of legislative negotiations.
- Banks are accused of lobbying to block rewards associated with stablecoins, which allow crypto platforms to share returns with users.
- The planned changes could restrict both direct and indirect reward models used by stablecoin platforms and third parties.
- Lawmakers are also considering proposals to ease taxes on small stablecoin payments and rewards from crypto staking.
Brian Armstrong draws red line on GENIUS Act changes
In a publication shared on Sunday on X, Brian Armstrong estimated that the reopening of the GENIUS law would constitute a real “red line”. He argues that banks are actively trying to block reward mechanisms linked to stablecoins in order to limit the growing influence of fintech platforms. Coinbase, he added, would strongly oppose any attempt to revise the legislation after months of negotiations.
According to Armstrong, this banking resistance reflects a short-term vision. He believes that financial institutions will eventually support stablecoin rewards once they see the economic potential. Current lobbying efforts, he argues, have mostly contributed to slowing progress and raising ethical questions, without concretely improving the consumer protection.
The GENIUS Act was designed by lawmakers to strike a balance between innovation and oversight. It prohibits stablecoin issuers from paying interest directly, while allowing platforms and third-party players to offer rewards through other structures. This distinction is today at the heart of tensions between traditional banks and companies in the crypto sector.
Banks warn about stablecoin rewards versus crypto yields
The debate intensified following the statements of Max Averymember of the board of directors and head of business development at Digital Ascension Group. He explained why some banks want lawmakers to revisit the law, warning that the proposed amendments could significantly reduce stablecoin rewards.
Avery highlighted several key points explaining the banks' opposition:
- The proposed amendments could limit both direct and indirect rewards associated with stablecoins.
- Platforms would risk losing the ability to redistribute returns through third-party programs.
- Banks earn about 4% return on reserves deposited with the Federal Reserve.
- Traditional savings accounts often offer little to no interest.
- Available studies do not show clear evidence of massive deposit losses at community banks.
According to Avery, banks present these issues as security issues when, above all, they seek to protect their profit margins. Stablecoin platforms, by redistributing part of the returns to users, are calling into question a long-established model and forcing banks to rethink their practices.
The discussion around stablecoins is no longer limited to rewards. Last week, US lawmakers introduced a bill aimed at easing taxation related to the daily use of cryptocurrencies. Representatives Max Miller and Steven Horsford notably proposed exempting stablecoin payments of less than $200 from capital gains tax, in order to facilitate their use for everyday expenses.
Other provisions would also allow users to defer reporting income from staking and mining rewards for up to five years. Taken as a whole, these projects illustrate the growing place of stablecoins at the heart of American debates on financial and tax policy.
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