Coinbase CEO Warns Against Reopening GENIUS Act as Stablecoin Debate Heats Up

Coinbase CEO Brian Armstrong has warned US lawmakers against reopening the recently passed GENIUS Act, arguing that changes could reduce competition in the stablecoin market. He accused major banks of pushing Congress to weaken the law to protect their own interests. The comments come as debate grows over how stablecoins should be regulated in the United States.

Armstrong Draws ‘Red Line’ on Changes to GENIUS Act

In a post shared Sunday on X, Armstrong stated that reopening the GENIUS Act would cross a “red line.” He argued that banks are lobbying to block stablecoin rewards and limit the role of fintech platforms. Coinbase, he added, would push back against any effort to revise the legislation after months of negotiations.

According to Armstrong, resistance from banks reflects a short-term mindset. He predicted that financial institutions would eventually support stablecoin rewards once they saw the business opportunity. Current lobbying efforts, he maintained, have slowed progress and raised ethical concerns rather than improving consumer protection.

Lawmakers designed the GENIUS Act to balance innovation with oversight. The law prevents stablecoin issuers from paying interest directly but allows platforms and third parties to offer rewards through other structures. That distinction has become a key point of disagreement between banks and crypto companies.

Banks Warn on Stablecoin Rewards as Crypto Platforms Share Yield

The debate intensified after comments from Max Avery, a board member and business development executive at Digital Ascension Group. He explained why some banks want lawmakers to revisit the act and warned that proposed changes could sharply reduce stablecoin rewards.

Avery highlighted several issues behind bank opposition:

• Proposed amendments could restrict both direct and indirect stablecoin rewards.
• Platforms could lose the ability to share yield through third-party programs.
• Banks earn about 4% on reserves held at the Federal Reserve.
• Traditional savings accounts often pay little or no interest.
• Research shows no clear evidence of major deposit losses at community banks.

Banks are framing the issue as a safety concern while protecting profit margins, Avery said. Stablecoin platforms, he argued, challenge the existing system by sharing returns with users, putting pressure on banks to change long-standing practices.

Discussion around stablecoins now extends beyond rewards. Last week, US lawmakers introduced a draft bill to ease tax rules for everyday crypto use. Representatives Max Miller and Steven Horsford proposed exempting stablecoin payments of up to $200 from capital gains taxes, making them easier to use for daily spending.

Other provisions would allow users to delay reporting income from staking and mining rewards for up to 5 years. Taken together, the proposals show that stablecoins are playing an increasingly prominent role in US financial and tax policy debates.