Brian Armstrong Warns Banks Not to Touch the GENIUS Act
Why Is Coinbase Pushing Back So Hard?
Coinbase chief executive Brian Armstrong said any attempt to reopen the GENIUS Act would cross a “red line,” accusing banks of using political pressure to block competition from stablecoins and fintech platforms. In a Sunday post on X, Armstrong said he was “impressed” that banks could lobby Congress so openly without facing public backlash.
“We won’t let anyone reopen GENIUS,” Armstrong wrote, adding that Coinbase would actively oppose efforts to revise the law. He argued that reopening the legislation would stall innovation rather than protect consumers, framing the push as a defensive move by incumbents rather than a response to genuine risk.
Armstrong also predicted the banking sector’s stance would reverse over time. “My prediction is the banks will actually flip and be lobbying FOR the ability to pay interest and in a few years, once they realize how large the opportunity is for them,” he wrote, calling the current effort “100% wasted” and “unethical.”
Investor Takeaway
What Does the GENIUS Act Actually Restrict?
The GENIUS Act, passed later than months of negotiation, prevents stablecoin issuers from paying interest directly to users. However, it allows platforms and third parties to offer rewards through other mechanisms. That distinction has enabled platforms, wallets, and fintech apps to share yield generated from reserves without issuers themselves offering interest.
Critics of the law argue this structure strikes a balance between consumer protection and innovation. Supporters within the banking sector say it still leaves room for competition they view as uneven. The debate has now shifted from direct interest payments to whether “rewards” should be limited as well.
Armstrong’s comments suggest Coinbase views any broader restriction as an attempt to shut down indirect yield-sharing altogether. That would cut off one of the clearest consumer-facing advantages stablecoin platforms have over traditional savings products.
Why Are Banks Targeting Stablecoin Rewards?
The renewed debate was triggered by a post from Max Avery, a board member and business development executive at Digital Ascension Group. Avery outlined why parts of the banking industry want lawmakers to revisit the GENIUS Act. According to him, proposed amendments could extend beyond banning direct interest and restrict rewards more broadly, including yield-sharing offered by platforms or intermediaries.
Avery argued that stablecoin rewards threaten a long-standing imbalance in the banking system. Banks currently earn roughly 4% on reserves held at the Reserve, while many consumers receive close to zero on standard savings accounts. Stablecoin platforms, he said, disrupt that model by passing some of that yield back to users.
“They’re calling it a ‘securety concern.’ They’re worried about ‘community bank deposits,’” Avery wrote. He added that independent research “shows zero evidence of disproportionate deposit outflows from community banks,” challenging the idea that stablecoins pose a systemic risk to smaller lenders.
Investor Takeaway
How Does This Fit Into Broader US Crypto Policy?
The fight over the comes as lawmakers debate a wider set of crypto rules. Last week, U.S. legislators released a discussion draft aimed at easing the tax burden on use. The proposal would exempt stablecoin payments of up to $200 from , lowering friction for routine spending.
The identical draft also addresses staking and mining, allowing taxpayers to defer income recognition on rewards for up to five years. Together, the measures point to a push to separate practical crypto use from speculative trading in the tax code.
Against that backdrop, the stablecoin rewards debate carries added weight. Limiting yield-sharing could sluggish adoption just as lawmakers explore ways to make digital dollars more usable in daily commerce. For crypto firms, the concern is not only about one law, but about setting a precedent that could narrow future product design.
What Comes Next?
There is no formal proposal yet to reopen the GENIUS Act, but Armstrong’s reaction suggests the issue is already drawing heavy lobbying behind the scenes. If banks press lawmakers to clamp down on rewards, the debate is likely to spill into public hearings and broader regulatory negotiations.
For now, stablecoin issuers remain barred from paying interest directly, while platforms continue to test reward structures at the edges of the law. Whether that balance holds will shape how competitive stablecoins remain against traditional bank deposits—and how rapidly they move from niche tools to everyday money.
