Coinbase Defends Stablecoin Rewards Against Banking Groups’ Interpretation of GENIUS Act

Coinbase has taken a firm stance in defending stablecoin reward programs, challenging banking associations' interpretation of the GENIUS Act. The crypto exchange argues that attempts to classify merchant discounts and third-party benefits as prohibited "interest" go beyond what Congress intended. According to Chief Policy Officer Faryar Shirzad, the Act only prohibits yield paid directly by issuers, and broader interpretations could stifle innovation in the crypto space. This development highlights the ongoing tension between traditional financial institutions and the evolving cryptocurrency industry, with Coinbase positioning itself as a defender of crypto-friendly policies.

Coinbase Challenges Banking Groups Over Stablecoin Rewards Interpretation

Coinbase has launched a robust defense of stablecoin reward programs, accusing banking associations of overreaching in their interpretation of the GENIUS Act. The crypto exchange contends that efforts to classify merchant discounts and third-party benefits as prohibited "interest" exceed congressional intent.

Chief Policy Officer Faryar Shirzad argues the Act only bans yield paid directly by issuers, warning that broader application WOULD create regulatory chaos. This clash highlights growing tensions between traditional finance and crypto innovators as stablecoins gain mainstream traction.

The American Bankers Association's push for expansive restrictions signals mounting institutional resistance to decentralized finance models. Market observers note the outcome could significantly impact adoption curves for payment-focused cryptocurrencies.

Crypto Firms Seek Bank Charters to Expand Financial Services

Ripple, Coinbase, Wise, and Sony Bank are vying for bank charters to integrate cryptocurrency services directly into their offerings. Ripple CEO Brad Garlinghouse, who previously criticized traditional banks for sidelining crypto, is now leading the charge to establish a crypto-aligned bank. This move mirrors broader industry trends, with firms like Coinbase and Wise submitting similar applications, while retail giants Amazon and Walmart explore bank-like financial services.

Regulators appointed during the TRUMP administration appear receptive, creating tension between established banks and crypto-native applicants. Comptroller of the Currency Jonathan Gould emphasized the need for crypto activities to operate within the banking system—provided legal and safety conditions are met. The Office of the Comptroller oversees national bank charters and is processing a wave of trust charter applications, which allow asset custody but prohibit deposit-taking or lending.