Brian Armstrong Defends Crypto Rewards in Fiery Capitol Hill Showdown with Traditional Banks

Coinbase CEO clashes with legacy finance gatekeepers over the right to innovate.

Banking lobbyists fume as Armstrong champions crypto's disruptive potential—while Wall Street counts its dwindling margins.

The hearing exposed the growing rift between analog regulators and the digital asset revolution. One side sees consumer protection; the other sees protectionism.

Bonus jab: Banks spent more on lobbying than engineering this quarter—no wonder they're losing.

Banks lobby to kill crypto rewards as capital outflow fears grow

Banking trade groups are actively pressuring Congress to ban these crypto rewards. They argue that offering rates like Coinbase’s 4.1% will lure customers away from small banks.

John Court, who serves as executive vice president at the Bank Policy Institute, warned lawmakers that these reward programs pose a threat to the country’s broader economic stability.

“If people are pulling their deposits out of their bank accounts and transferring them into stablecoin investments,” Court said, “you are effectively neutering, to some degree, the ability of the banks to continue to lend into the real economy and to support and fuel the economic growth.”

The warning didn’t come out of nowhere. A report from the Treasury Borrowing Advisory Committee in April estimated that as much as $6.6 trillion in customer deposits could shift from traditional banks into stablecoins if reward systems continue.

The banks say that kind of change would break their lending models. Brian doesn’t buy that. He called the whole argument a “boogeyman” and accused big banks of hiding behind fake narratives.

“The real reason that they’re bringing this up as an issue,” Brian said, “is that they’re trying to protect the $180 billion that they made on their payment business. This is something that big banks are funding behind the scenes. It’s not small banks whatsoever.”

Meanwhile, just earlier, JPMorgan Chase CEO Jamie Dimon met with Senate Republicans. Dimon later said the issue of stablecoin rewards wasn’t mentioned in the meeting, but still told reporters that regulators need to be careful. “We’re not against crypto,” Jamie said, choosing his words carefully. But the bank industry he represents is moving fast to push lawmakers to act.

Lawmakers split as crypto groups and banks exchange letters

Both sides are filing letters with Congress. On August 12, the American Bankers Association and several state-level associations asked lawmakers to “close this loophole and protect the financial system.” The phrase “close this loophole” is what banks keep repeating. Their goal is to reclassify reward systems so they fall under the same restrictions as interest.

Crypto groups immediately fired back with a warning that banning rewards on exchanges like Coinbase and Kraken would “tilt the playing field in favor of legacy institutions, particularly larger banks, that routinely fail to deliver competitive returns and deprive consumers of meaningful choice.”

Inside the Senate, there’s still no final agreement on how to handle it. The market structure bill, which includes crypto platform regulations, has gone through several drafts. Nothing is finalized. But some lawmakers think the fight over staking and rewards is already done.

Senator Cynthia Lummis, a Republican from Wyoming who’s working with Banking Chair Tim Scott from South Carolina, said the matter has already been resolved. “The issue was heavily litigated in the GENIUS Act,” Cynthia said, “and I am supportive of the compromise achieved by the banks and the digital asset industry. I do not think this issue should be reopened.”

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