Stablecoin regulation debate intensifies as fintechs push back against proposed limits on rewards
The debate over stablecoin regulation in the United States has intensified after Coinbase CEO Brian Armstrong publicly warned that any effort to reopen the GENIUS Act would cross a “red line.” His comments reflect growing tension between crypto platforms and traditional banks over competition, innovation, and access to consumer yield.
The GENIUS Act, passed after lengthy negotiations, established a regulatory framework for stablecoins. While it prohibits stablecoin issuers from paying interest directly, it allows platforms and third parties to offer rewards through alternative mechanisms. Armstrong argues that this balance was deliberate and should not be undone.
According to his remarks, reopening the law would introduce uncertainty and undermine progress made toward regulatory clarity. He also suggested that renewed amendments are being driven less by safety concerns and more by competitive pressure.
Armstrong accused parts of the banking sector of lobbying lawmakers to restrict stablecoin rewards, claiming this is an attempt to preserve traditional banking margins. Critics of the proposed changes argue that banks earn significant returns on reserves, while consumers often receive minimal interest on savings accounts.
The controversy comes as lawmakers consider additional crypto-related reforms, including tax relief for small stablecoin payments and clearer rules around staking and mining. Together, these developments signal that stablecoins are becoming a central issue in financial policy.
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