During a recent congressional hearing, Coinbase CEO Brian Armstrong fired back at critics, accusing banks of hiding behind “false arguments” to protect their dominance in the financial system. Coinbase currently offers a 4.1% yield on USDC holdings, while Kraken’s program goes even further, paying up to 5.5%
Banking associations, including the American Bankers Association, are lobbying hard to outlaw such programs, claiming they pull capital away from traditional deposits and weaken the lending capacity of banks. A Treasury Borrowing Advisory Committee report even floated the possibility that as much as $6.6 trillion could, in theory, migrate from deposits into stablecoins.
Armstrong rejected those claims, telling CNBC that the real issue is banks trying to defend their $180 billion annual payments revenue. He stressed that the campaign is being driven mainly by large institutions, not smaller regional banks.
The debate is closely linked to the recently passed GENIUS Act, which bans paying interest on stablecoins but leaves room for reward programs like those offered by Coinbase and crypto exchange Kraken.
Lawmakers remain split. Senator Cynthia Lummis argues the legislation already strikes the right balance, while banking groups continue to push for tougher restrictions. JPMorgan CEO Jamie Dimon, meanwhile, said he isn’t fundamentally opposed to crypto, but stressed the need for “thoughtful” regulation. Crypto advocacy groups warn that banning rewards would tilt the playing field in favor of legacy banks and deprive consumers of access to stable, predictable yields in digital assets.