A CEO of a compliant platform claims that restarting the GENIUS Act is a "red line," with banks lobbying to obstruct stablecoin yields.

Source: Yellow Original Title: Coinbase CEO says reopening the GENIUS Act is a “red line” amid banking lobby against stablecoin yields

Original Link: A compliant platform CEO Brian Armstrong warns that any attempt to reopen the GENIUS bill will cross a “red line.”

Armstrong accuses banks of pressuring Congress to block stablecoin rewards and limit fintech competition.

GENIUS Act prohibits stablecoin issuers from paying interest directly but allows platforms and third parties to offer rewards. Banks want to eliminate this provision.

What happened

Armstrong responded to Max Avery, a member of the Digital Elevation Group board, who detailed efforts by the banking industry to amend the legislation.

Avery argued that the proposed changes would not only ban direct interest payments but also prohibit all “reward” mechanisms offered by platforms.

Currently, banks earn about 4% at the Federal Reserve, while paying nearly zero to savings account consumers.

“They call it a ‘safety issue.’ They say they are worried about ‘community bank deposits,’” Avery wrote, adding that research has not shown these community banks to have disproportionate withdrawals.

“We will not allow anyone to reopen the GENIUS,” Armstrong wrote on X.

He predicted that ultimately, banks will lobby to pay interest on stablecoins once they recognize the opportunity.

“This is 100% a waste of effort on their part (besides being unethical),” he added.

Why it matters

The GENIUS Act was passed after months of negotiations between legislators, banks, and crypto companies.

Bank lobbying threatens to undo this compromise, which allows platforms like certain compliant platforms to offer stablecoin yield sharing programs.

Stablecoin platforms compete directly with banks by offering users a share of the yields generated by reserves.

This challenges the practice of banks capturing the spread between the Federal Reserve rate and the interest paid to consumer deposits.

Last week, House Representatives Max Miller and Steven Horsford introduced the digital asset PARITY Act, aimed at reducing tax burdens for cryptocurrency users.

The proposal would exempt capital gains taxes on regulated stablecoin transactions under $200 and allow a five-year delay on taxes for staking and mining income.