Last updated on January 3rd, 2026 at 02:13 pm
Quick Breakdown
- Coinbase accused U.S. banking groups of pushing an “unamerican” effort to ban stablecoin rewards and cashbacks.
- Banks warn that widespread use of stablecoin could trigger trillions of dollars in deposit outflows and threaten their business model.
- Coinbase argues that banks are protecting their $180B fee-generating payments system and blocking innovation.
Crypto exchange fights back against lobby push
Coinbase has criticized a coalition of US banking groups after they urged regulators to prohibit merchant rewards, cash backs and discounts tied to stablecoin payments.
The dispute centres on how far the GENIUS Act stretches, a federal law that forbids stablecoin issuers from offering yield or interest to token holders, but says nothing about crypto exchanges or businesses that use the tokens for payments.
Banking associations argue that any third-party perk connected to a stablecoin amounts to an “indirect interest,” which they claim violates the spirit of the law. Coinbase’s chief policy officer, Faryar Shirzad, rejected that interpretation outright, saying regulators should “stick to the statutory text” and avoid giving banks the power to dictate how consumers use their own digital dollars.
“There is something unamerican about bank lobbyists pressing regulators to tell stablecoin customers what they can and cannot do with their own money after it is issued,”
he wrote on X.
Banks fear massive deposit flight
Behind the push lies a more profound concern: if stablecoins go mainstream, banks could lose a significant chunk of their deposits. A US Treasury analysis from April estimated that widespread adoption of yield-bearing stablecoins could drain more than $6.6 trillion from traditional bank accounts, a blow to institutions that rely on deposits to fund lending operations and sustain profits.
Bank lobbyists argue that allowing cashback or reward programs could accelerate this shift, nudging consumers toward stablecoins and away from conventional bank products.
Coinbase says banks are protecting a costly payment system
Coinbase countered that banks are simply trying to shield outdated payment rails that burden merchants with excessive fees. In 2024 alone, US merchants paid more than $180 billion in card fees, costs that stablecoin-based payments could dramatically reduce, the exchange argued.
The company warned that banning third-party incentives would weaken the appeal of stablecoins as a payment option, allowing “big banks” to keep their grip on the payments ecosystem.
Crypto exchanges like Coinbase also have a stake in the outcome. Shirzad cautioned that these programs may be at risk if regulators bow to banking pressure, but insisted he’s confident “common sense will prevail” as the debate unfolds.
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