Brian Armstrong, the CEO of Coinbase, has made a bold prediction regarding the future of stablecoins in the United States banking sector. He believes that banks, which currently oppose interest-generating stablecoins, will eventually change their stance to support them. This pivot is expected as Armstrong suggests that financial institutions will lobby Congress in the coming years to permit stablecoin issuers to pay interest directly to their holders.
This assertion directly challenges the current efforts of the banking industry, which seeks to amend the GENIUS Act. Enacted in July 2025, this legislation aims to regulate stablecoins by prohibiting issuers, such as Circle and Tether, from offering interest payments on these digital currencies. However, the law does allow platforms like exchanges to relay Treasury reserve yields to users, creating a competitive edge for non-bank entities.
The banking lobby expresses concerns over this provision, arguing that it allows crypto platforms to offer attractive yields of 4% to 5% on cash equivalents. This undermines the traditional banks” low-cost deposit models, leaving them struggling to attract capital in a tightening market. As a response, lobbyists are advocating for amendments to the GENIUS Act to close what they see as a loophole.
Armstrong has openly criticized the banking sector”s efforts to revise this legislation, claiming that such actions represent a fundamental issue for the cryptocurrency industry. He conveyed his frustrations through a post on X, stating that banks are employing “mental gymnastics” in their arguments about safety while providing below-market deposit rates to customers. He believes that the ongoing lobbying efforts are ultimately misguided and that the market will naturally evolve toward digital assets.
Armstrong further predicts that banks will soon recognize the necessity of adopting digital assets and issuing their own tokenized dollars to remain competitive in a rapidly changing financial landscape. Rather than attempting to eliminate the yield features of stablecoins, he asserts that banks should embrace blockchain technology to capture the yield spread directly.
The ongoing regulatory battle surrounding stablecoins is not merely a matter of compliance but highlights a larger conflict between traditional banking practices and the innovation offered by financial technology. While banks continue to resist changes that could threaten their low-cost deposit base, Armstrong maintains that market dynamics will compel them to adapt to the advantages offered by stablecoins.
Until such a transformation takes place, companies like Coinbase are committed to upholding the current framework for stablecoins, allowing them to act as high-yield intermediaries between users and underlying Treasury reserves.
