Brian Armstrong Warns Banks Against Revising GENIUS Act For Crypto Rewards

TLDR

Table of Contents

Coinbase CEO opposes reopening GENIUS Act, calling it a “red line” for crypto.
Banks are lobbying Congress to restrict stablecoin rewards and competition.
GENIUS Act bars direct stablecoin interest but allows third-party rewards.
US lawmakers propose tax relief for small stablecoin payments and crypto rewards.

Coinbase CEO Brian Armstrong warned that any attempt to reopen the GENIUS Act would cross a “red line,” accusing banks of lobbying Congress to limit stablecoin competition. Armstrong said the company would continue opposing efforts to revise the law, emphasizing that stablecoin rewards and fintech platforms should remain operational under current regulations. His comments come amid growing discussions on stablecoin legislation and banking influence.

Armstrong Responds to Bank Lobbying

Armstrong expressed concern over banks using political pressure to block competition from stablecoins. He said in a post on X, “We won’t let anyone reopen GENIUS.”

He added that banks may later support offering interest on stablecoins once they see the market opportunity. “It’s 100% wasted effort on their part, in addition to being unethical,” Armstrong wrote.

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

The GENIUS Act, passed after months of negotiation, bars stablecoin issuers from paying interest directly. However, it allows platforms and third parties to offer rewards to users, enabling indirect yield-sharing mechanisms.

Bank Lobbying and Stablecoin Rewards

The banking sector has pushed for changes that would limit stablecoin rewards. Max Avery, a board member at Digital Ascension Group, said proposals aim to restrict indirect yield-sharing, beyond banning direct interest payments.

Avery noted that banks earn roughly 4% on reserves at the Federal Reserve while consumers often receive nearly zero. Stablecoin platforms sharing yield with users challenge this model.

“They’re calling it a ‘safety concern’ and worry about ‘community bank deposits,’” Avery said. He added that research shows no evidence of disproportionate outflows from community banks.

US Lawmakers and Tax Relief

US lawmakers have introduced a discussion draft to reduce the tax burden on stablecoin transactions. The proposal would exempt payments of up to $200 in regulated, dollar-pegged stablecoins from capital gains taxes.

Representatives Max Miller and Steven Horsford proposed that taxpayers could defer income recognition on staking and mining rewards for up to five years. This aims to simplify taxation and encourage broader crypto adoption.

The draft also covers issues beyond payments, including rewards earned from blockchain activities. The proposal represents part of ongoing efforts to regulate the stablecoin and broader crypto ecosystem while minimizing consumer tax obligations.

Coinbase’s Stance on Stablecoin Regulations

Armstrong emphasized that Coinbase will resist any attempts to reopen or revise the GENIUS Act. He said the company aims to maintain current opportunities for stablecoin rewards and fintech platform growth.

The CEO noted that stablecoins provide a way for users to earn rewards safely while staying compliant with existing laws. He also pointed out that the banking industry may eventually support similar offerings after recognizing their potential.

Armstrong’s statements signal Coinbase’s active role in legislative discussions. The company continues to monitor regulatory developments and engage with lawmakers on crypto policies.