Coinbase CEO Brian Armstrong said any efforts to reopen the Genius Act would cross a “red line,” accusing banks of using political pressure to prevent competition from stablecoins and fintech platforms.
In a Sunday post on X, Armstrong said he was “impressed” that the bank could openly lobby Congress without any repercussions, adding that Coinbase would continue to push for efforts to amend the law. “We will not let anyone reopen Genius,” he wrote.
“My prediction is that the banks will really turn around and lobby for the ability to pay interest and yield on stablecoins in a few years when they realize how big the opportunity is for them. So this is a 100% wasted effort on their part (besides being unethical),” Armstrong said.
The Genius Act, passed after months of negotiations, prevents stablecoin issuers from paying interest directly, but allows platforms and third parties to award rewards.
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Bank lobbying aims for stablecoin “reward”
Armstrong’s comments came in response to a post by Max Avery, a board member and business development executive at Digital Ascension Group, who explained why parts of the banking sector are pressuring lawmakers to reimplement the law.
Avery argued that the proposed amendments would go beyond banning direct interest payments by stablecoin issuers and instead ban “rewards” more broadly, thereby cutting back on indirect yield-sharing mechanisms offered by platforms and third parties.
Avery pointed out that while banks currently earn about 4% on reserves held at the Federal Reserve, consumers often earn almost zero on traditional savings accounts. Stablecoin platforms threaten that model by offering to share some of that yield with users, he said.
“They’re calling it a ‘security concern’.” They are concerned about ‘community bank deposits,'” he wrote, adding that independent research “shows no evidence of disproportionate deposit outflows from community banks.”
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US lawmakers propose tax relief for stablecoin payments
Last week, US lawmakers unveiled a discussion draft aimed at reducing the tax burden on everyday crypto users by exempting small stablecoin transactions from capital gains taxes. The proposal, introduced by Representatives Max Miller and Steven Horsford, would allow payments of up to $200 in regulated, dollar-pegged stablecoins to avoid profit or loss recognition.
Beyond payouts, the bill targets taxation issues around staking and mining by allowing taxpayers to defer income recognition on rewards for up to five years.
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