Stablecoins dispute: Coinbase clashes with US banks

INFBusiness
22.09.2025
Markets

In the US, tensions are brewing between the crypto and banking industries. The point of contention is stablecoins. Specifically, it concerns the rewards that holders of USDC and similar cryptocurrencies can receive on crypto exchanges.
Coinbase CEO Brian Armstrong took this as an opportunity to hit back. During a hearing before the US Congress, he dismissed criticism. Armstrong accused the institutions of putting forward “spurious arguments” to defend their market position.
Specifically, it's about rewards for holding stablecoins like USDC. Coinbase currently offers a 4.1 percent return, while competitor Kraken offers a 5.5 percent return.
Banking lobbies like the American Bankers Association are urging Congress to ban such models. They argue that customer funds are being diverted from traditional deposits and shifted into stablecoins, weakening banks' ability to lend to the real economy.
According to a report by the Treasury Borrowing Advisory Committee, up to $6.6 trillion could theoretically flow from bank deposits into stablecoins.
Armstrong dismissed this as unfounded: “The banks simply want to protect their $180 billion in payments revenue,” he told CNBC. The issue is being driven specifically by large institutions, not smaller regional banks.
The debate is closely linked to the GENIUS Act, passed this summer. While it prohibits interest payments on stablecoins, it explicitly permits rewards programs like those offered by Coinbase and Kraken.
The issue is controversial within the Senate. While banking associations continue to exert pressure, Senator Cynthia Lummis, for example, considers the issue resolved. The balance between banks and crypto providers has been struck with the GENIUS Act.
Leading bankers like JPMorgan CEO Jamie Dimon have recently expressed caution, saying that while they are not fundamentally opposed to crypto, regulations must be designed “carefully.”
Crypto associations, in turn, criticize that a ban on rewards would “distort the playing field in favor of outdated institutions” and deprive consumers of the opportunity to benefit from stable returns.
Meanwhile, researchers in Germany are also warning about the risks that stablecoins can bring. You can read more about them here: Shadow Banking Risk: Will Stablecoins Trigger the Next Financial Crisis?

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