Coinbase CEO Brian Armstrong Draws “Red Line” Against Bank Attempts to Undermine GENIUS Act on Stablecoins

As the banking sector intensifies its lobbying efforts to curb competition from the burgeoning stablecoin market, Coinbase CEO Brian Armstrong has issued a definitive warning. He has declared a firm “red line” against any attempts to revisit or amend the recently enacted GENIUS Act, labeling such moves as a direct threat to the cryptocurrency industry’s hard-won progress.

Armstrong delivered a stern message to major U.S. banks, asserting that any lobbying directed at Congress to modify the GENIUS Act – specifically to permit banks to issue interest-bearing stablecoins – would trigger Coinbase’s “red line” and provoke comprehensive opposition. He accused traditional financial institutions of leveraging political influence to stifle competition from innovative stablecoin and fintech platforms.

In a pointed post on X (formerly Twitter), Armstrong criticized banks for actively pressuring lawmakers to alter legislation he believes is crucial for fostering innovation in fintech and digital assets. He expressed his “impressions” at the audacity of banks openly lobbying to obstruct competition from stablecoins and fintech platforms without facing significant public or political backlash. His message was unequivocal: “We won’t let anyone reopen GENIUS.”

This escalating tension underscores the growing rift between crypto innovators and traditional finance. Armstrong believes banks are strategically positioning themselves to dominate a stablecoin market he anticipates will surge into the trillions of dollars. Despite Coinbase’s ongoing collaborations with leading banks on pilot programs for stablecoin custody and trading, the company remains vigilant against established institutions seeking to secure unfair competitive advantages.

Banks Target Stablecoin “Rewards” in Lobbying Push

The GENIUS Act, a landmark piece of legislation, was enacted earlier this year following extensive negotiations. Passed by the U.S. Senate in early 2025, it established the nation’s first federal framework for stablecoins. Key provisions mandate that stablecoins must be 1:1 backed by high-quality, liquid assets like U.S. Treasury bills, while crucially prohibiting interest payments to holders. This prohibition was designed to prevent a mass exodus of deposits from traditional banks.

Banks have consistently lobbied against the attractive rewards offered by platforms like Coinbase for stablecoins (currently around 4.1% for USDC), arguing that these incentives threaten community deposits and their ability to lend. Armstrong vehemently refutes these claims, dismissing them as “false threats.” He draws parallels to historical resistance against technological advancements like ATMs and online banking, predicting that banks will eventually recognize stablecoins as a vast opportunity rather than a rival.

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 recent remarks came in response to a banking industry report advocating for an expanded prohibition to include “indirect benefit sharing,” a move that would effectively neutralize the competitive advantage offered by stablecoin platforms.

Max Avery, a board member of Digital Ascension Group and an outspoken critic of conventional banking practices, highlighted the stark contrast: banks currently earn approximately 4% on reserves held at the Federal Reserve, yet they offer consumers near-zero returns on savings accounts. Stablecoins, in contrast, allow platforms to pass on these yields, directly challenging the banks’ lucrative interest rate spreads. Avery dismissed the banks’ arguments about “community bank deposits” and “systemic safety” as unfounded, citing independent research indicating no disproportionate outflows from smaller financial institutions.

Armstrong anticipates that banks will ultimately reverse their stance, eventually advocating for stablecoins to pay interest and yields once they fully grasp the immense market potential. He characterized the current lobbying efforts as “100% wasted effort (and unethical besides) for them.”

This ongoing conflict underscores the broader ideological and economic tension between traditional financial powerhouses and the burgeoning cryptocurrency ecosystem. Driven by applications in payments, remittances, and decentralized finance (DeFi), the stablecoin market capitalization has already surged past $300 billion this year. While the regulatory clarity provided by the GENIUS Act was hailed as a monumental achievement, any amendments risk delaying its implementation and deterring crucial investment.

U.S. Lawmakers Propose Tax Relief for Stablecoin Payments

Adding another layer to the evolving legislative landscape, U.S. Representatives Max Miller and Steven Horsford recently introduced a discussion draft aimed at alleviating the tax burden for cryptocurrency users. The proposal seeks to exempt small transactions (up to $200) conducted with regulated, dollar-pegged stablecoins from capital gains tax. Furthermore, it suggests allowing the deferral of income recognition from staking and mining rewards for up to five years. If advanced, this legislation could significantly accelerate stablecoin adoption by reducing compliance hurdles for everyday users.

As the cryptocurrency market closes out 2025 amidst liquidity scarcity and Bitcoin hovering around $87,000, industry leaders like Armstrong are signaling their unwavering commitment to defending hard-won regulatory frameworks. Any move to reconsider the GENIUS Act is poised to escalate into a high-stakes battle between fintech innovators and entrenched banking interests in Washington.

Globally, stablecoin adoption is experiencing rapid growth, with Coinbase projecting the market size to reach an impressive $1.2 trillion by 2028. Citibank offers an even more optimistic forecast, predicting up to $4 trillion by 2030 under favorable conditions. Across regions, from Taiwan to other international markets, regulators are grappling with similar debates concerning yields, bank participation, and overall financial stability. While Armstrong foresees banks eventually embracing crypto once they recognize the “opportunity,” Coinbase remains resolute in its commitment to oppose any amendments that would unfairly tilt the competitive playing field.