Big US banks are under increasing pressure to limit the rewards users receive for holding stablecoins.
In the past few hours, Coinbase Chief Legal Officer Paul Grewal has launched a harsh critique of large banking institutions, accusing them of pressuring Congress to eliminate these benefits.
“Big banks are trying to overturn the law (GENIUS). They want a bailout because it's, well, hard to compete with products that are often terrible. The rewards of stablecoins must be maintained. This project took effect a month ago and is now law,” Grewal wrote in a post on social network X.
For business owners, stablecoins offer more possibilities than traditional financial system instruments. When he talks about “terrible” products, he means that banks realize they can't compete with them.
The background to the dispute is the GENIUS law. As reported by CriptoNoticias, it was approved by the US House of Representatives at the end of July (Guiding and Establishing National Innovation for US Stablecoins).
The project was approved with bipartisan support; The first comprehensive regulatory framework for stablecoins in the USensures that these assets are backed on a one-to-one basis by liquidity reserves and that the issuer is subject to regular audits.
Here's what the regulations don't prohibit and what banks want to restrict: Rewards provided by exchanges to users who hold stablecoins.
Such compensation poses a problem for large banks, represented by lobbying groups such as the Bank Policy Institute and the American Bankers Association. they calculate it up to $6.6 billion They argue that depositors may migrate from traditional banking to the crypto ecosystem, a move that will reduce their ability to provide credit to the real economy.
Users put pressure on citizens
In his publication, Grewal included an invitation to his followers to join the Stand with Crypto initiative, a public pressure movement that seeks to mobilize users to defend their right to receive rewards for holding stablecoins.
Grewal himself urged Americans to use the movement to contact their senators, saying, “Rather than bailing out a broken system, it's time to protect consumers by respecting the law.”
The campaign aims to ensure that stablecoin rewards remain legal under the GENIUS Act and to put pressure on Congress to establish a clear regulatory framework that fosters innovation rather than bowing to the interests of banking lobbies.
In that respect, Coinbase CEO Brian Armstrong also spoke about the bank offensive.. He said on the social network: “The hypocrisy of banks is once again causing problems for cryptocurrencies. They are trying to take away the ability to earn rewards for holding stablecoins. Competition is good for consumers. They are only angry because they lost…”
Similar to Grewal, the businessman called on users to join Stand with Crypto.
This discussion on compensation doesn't end there. And a few days ago, Cody Carbone, CEO of Digital Chamber, a nonprofit dedicated to promoting cryptocurrencies, defended these incentives on X, assuring that “stablecoin rewards are not a legal loophole.”
“(Rewards) are not the same as bank interest rates, do not come with guaranteed returns, and are often dependent on how users actually use the platform,” Carbone explained.
Along these lines, he stressed that limiting these incentives will only slow down innovation. “People want options in pay, better benefits, and innovation. “Putting limits on compensation will only undermine progress.”
Meanwhile, Coinbase Chief Operating Officer Emily Choi said:If banks really wanted to protect consumers, they would spend more time developing better products. And they have less time to lobby against companies that are outperforming them. ” He further assured that he will continue to fight to keep the rewards valid.
Regardless of what happens in the short term, this dispute highlights the challenge of balancing consumer protection with freedom to innovate in a rapidly evolving field. How this dispute is resolved could not only redefine the relationship between banks and crypto companies, but also impact the level of adoption of the latter.
