Coinbase CEO slams banks lobbying Congress: Revisiting the "GENIUS Act" crosses the "red line"

As the banking sector intensifies lobbying efforts to curb competition from stablecoins, Coinbase CEO Brian Armstrong has drawn a firm line, opposing any reconsideration of the recently passed “GENIUS Act” (GENIUS Act), and has marked this as a “red line” for the cryptocurrency industry.
Coinbase CEO Brian Armstrong issued a stern warning to major U.S. banks, stating that any attempt to lobby Congress to amend the GENIUS Act to allow banks to issue interest-bearing stablecoins will cross the company’s “red line” and trigger full opposition. He accused banks of using political pressure to block competition from stablecoins and fintech platforms.

In a post on X, Armstrong criticized traditional banks for actively lobbying Congress to amend the legislation, saying this would stifle innovation in fintech and digital assets. Armstrong stated that he is “impressed” by how banks are now openly lobbying Congress to block competition from stablecoins and fintech platforms without facing resistance. He added, “We will not let anyone reopen GENIUS.”
Amid increasing tensions between crypto innovators and traditional finance, Armstrong believes banks are trying to dominate the stablecoin market, which he predicts could be worth trillions of dollars. Although Coinbase is collaborating with top banks on pilot projects for stablecoin custody and trading, it remains cautious of existing institutions seeking unfair advantages.
The goal of bank lobbying is to “reward” stablecoins
The GENIUS Act was enacted earlier this year after lengthy negotiations. The bill, passed by the U.S. Senate in early 2025, established the first federal stablecoin framework, requiring stablecoins to be backed 1:1 by high-quality assets like U.S. Treasuries, and prohibiting paying interest to holders to prevent bank deposit outflows.
Banks have long lobbied against stablecoin rewards offered by platforms like Coinbase (currently 4.1% for USDC), claiming these rewards threaten community deposits and lending capacity. Armstrong dismisses these as “false threats,” comparing them to past resistance to ATMs and online banking, and predicts that banks will soon see stablecoins as a huge opportunity rather than a competitor.

Exactly – I’m actually impressed the banks can lobby for this with a straight face and not get kicked out of senator’s offices. It takes some serious mental gymnastics.

We won’t let anyone reopen GENIUS. Red line issue for us. And will keep advocating for our customers and the… https://t.co/6EfF2oBn5A

— Brian Armstrong (@brian_armstrong) December 26, 2025

Armstrong’s comments respond to a banking industry initiative report that aims to expand the scope of bans to include “indirect revenue sharing,” effectively limiting the competitive advantage of stablecoin platforms.
Max Avery, a board member of Digital Ascension Group and a vocal critic of banking practices, pointed out that banks currently earn about 4% on reserves held at the Federal Reserve, while offering nearly zero returns on consumer savings accounts. In contrast, stablecoins enable platforms to pass on earnings, threatening banks’ profitable interest margins. Avery dismissed the banks’ arguments about “community bank deposits” and “system security” as baseless, citing independent research indicating that small institutions are not experiencing disproportionate fund outflows.
Armstrong predicts that banks will eventually change their stance and, recognizing the market potential, will advocate for allowing stablecoins to pay interest and generate yields. He describes the current lobbying as “100% a waste of effort for them (and also unethical).”
This conflict highlights broader tensions between traditional finance and the emerging crypto sector. Driven by payments, remittances, and decentralized finance (DeFi) use cases, the stablecoin market has surged to over $300 billion this year. Regulatory clarity brought by the GENIUS Act is seen as a milestone, but amendments could delay implementation and hinder investment.
U.S. lawmakers propose tax incentives for stablecoin payments
Additionally, in the legislative landscape, last week, U.S. Representatives Max Miller and Steven Horsford introduced a discussion draft aimed at reducing tax burdens for crypto users. The proposal would exempt small transactions (up to $200) involving regulated, dollar-pegged stablecoins from capital gains taxes, and allow the deferral of income from staking and mining rewards for up to five years. If successful, this would further promote stablecoin adoption by lowering compliance barriers for everyday users.
As the crypto market concludes 2025 with liquidity scarcity and Bitcoin holding around $87,000 amid volatility, industry leaders like Armstrong are signaling readiness to defend hard-won regulatory gains. Any move to revisit the GENIUS Act could escalate into a high-stakes game between Washington fintech innovators and entrenched banking interests.
Globally, stablecoin adoption is surging, with Coinbase projecting a market size of $1.2 trillion by 2028, and Citibank in optimistic scenarios predicting up to $4 trillion by 2030. In Taiwan and other regions, regulators are also debating issues related to yields, bank participation, and financial stability. Armstrong foresees that once banks recognize the “opportunity,” they will shift to support cryptocurrencies, but Coinbase is prepared to oppose any amendments that tilt the competitive environment.