Major US banks have stepped up their push to limit the rewards users receive for holding stablecoins. In recent hours, Coinbase's Chief Legal Officer, Paul Grewal, launched harsh criticism against large banking institutions, accusing them of pressuring Congress to eliminate these benefits.
“Big banks are trying to overturn the [GENIUS] law. They want a bailout because competing with products that often suck is, well, hard. Stablecoin rewards need to be maintained. This bill went into effect a month ago and is now law,” Grewal wrote in a post on social media site X.
For the executive, stablecoins offer more possibilities than traditional financial instruments. When he talks about products that "stink," he means that banks are aware that they can't compete against them.
The background to the dispute is the GENIUS (Guiding and Establishing National Innovation for US Stablecoins) Act, passed by the United States House of Representatives in late July.
The bill, passed with bipartisan support, establishes the first comprehensive regulatory framework for stablecoins in the U.S., ensuring that these assets are backed 1:1 by liquid reserves and that their issuers undergo regular audits. What the rule does not prohibit and what banks want to restrict are the rewards that exchanges offer to users who hold stablecoins.
For large banks, represented by lobby groups such as the Bank Policy Institute and the American Bankers Association, these rewards represent a problem. They estimate that up to $6.6 trillion in deposits could move from traditional banking to the cryptocurrency ecosystem, and argue that this movement would reduce their ability to provide loans to the real economy.
Users exert citizen pressure
Grewal accompanied his post with an invitation to his followers to join the Stand with Crypto initiative, a citizen pressure movement that seeks to mobilize users to defend their right to receive rewards for holding stablecoins.
Grewal himself urged Americans to take advantage of the movement and contact their senators: "It's time to protect consumers by respecting the law, not by bailing out a broken system."
The campaign's goal is to ensure that stablecoin rewards remain legal under the GENIUS Act, as well as to pressure Congress to establish a clear regulatory framework that encourages innovation rather than pandering to the interests of the banking lobby.
For his part, Coinbase CEO Brian Armstrong also spoke out about the banking crackdown. On social media, he noted: "Bank hypocrisy is causing problems for crypto again. They want to take away your ability to earn rewards for holding stablecoins. Competition is good for consumers. They're just angry because they're losing..."
This debate about rewards doesn't end there. A few days ago, Cody Carbone, CEO of the Digital Chamber, a nonprofit organization dedicated to promoting cryptocurrencies, defended these incentives on X, asserting that "stablecoin rewards are not a loophole."
Carbone explained: “[Rewards] are not the same as bank interest, they don’t come with guaranteed returns, and they often depend on how users actually use the platform.”
Along these lines, he emphasized that limiting these incentives would only hinder innovation: "People want choice, better returns, and innovation in payments. Restricting rewards will only kill progress."
Meanwhile, Coinbase Chief Operating Officer Emilie Choi stated that " if banks truly wanted to protect consumers, they would spend more time developing better products and less time lobbying companies that are outperforming them." She also assured that they will continue to fight to keep the rewards active.
Beyond the short-term outcome, this dispute highlights the challenge of balancing consumer protection with the freedom to innovate in a rapidly evolving sector. The resolution of the conflict could not only redefine the relationship between banks and cryptocurrency companies, but also influence the latter's adoption rates.
