Armstrong warns Senate: don’t bail out banks by banning crypto rewards

Coinbase CEO pushed back against the banks, claiming they are trying to block stablecoin rewards to protect their monopoly.

Coinbase escalated its fight with TradFi, doubling down on its lobbying efforts and accusing banks of trying to protect their monopoly. On Monday, September 29, Coinbase CEO Brian Armstrong posted on X while in Washington, D.C., lobbying lawmakers on stablecoin regulation.

Armstrong spoke from Capitol Hill while the U.S. Senate deliberated on the Digital Asset Market Structure and Investor Protection Act. This piece of legislation, clarifying crypto rules beyond those covered by the GENIUS Act, will determine which agency is in charge of crypto regulation and extend investor protections.

“I’ve never been more bullish about clear rules for crypto. It’s obvious that market structure is a freight train that’s left the station,” said Coinbase CEO Brian Armstrong. “But that hasn’t stopped the big banks from coming for another handout – this time paid by your crypto rewards,” he added.

Banks want to ban stablecoin rewards: Armstrong

According to Armstrong, banks are trying to relitigate issues that were already settled with the GENIUS Act. Notably, he says the banking lobby is coming after stablecoin rewards.

“Banks want to ban rewards to maintain their monopoly, and we’re making sure the Senate knows bailing out the big banks at the expense of the American consumer is not ok,” Armstrong stated.

Stablecoin rewards are a contentious regulatory issue. Under the GENIUS Act, stablecoins are not allowed to pay interest. However, they are allowed to pay rewards, which some in the banking sector consider a loophole.

Notably, banks fear that stablecoin rewards could cause a capital flight from the banks. What is more, according to the April Treasury Department report, consumers might move as much as $6.6 trillion out of banks into stablecoins, potentially threatening the banks’ ability to lend.