- Armstrong accused banks of attacking stablecoin rewards to protect deposits while competition gives consumers more financial freedom.
- The GENIUS Act loophole keeps rewards alive but banks lobby hard as $6.6T threatens to flow from deposits into stablecoins.
- John Deaton backed Armstrong by calling banks enemies of ordinary people citing bailouts and the 2008 crisis as proof.
Banks and crypto leaders are colliding in Washington as Coinbase CEO Brian Armstrong accused Wall Street of trying to kill stablecoin rewards. He told lawmakers that banks want to strip consumers of choice because stablecoins threaten their deposit monopoly. The heated debate took center stage during Capitol Hill discussions around the GENIUS Act, which already blocks interest on stablecoins but keeps rewards intact.
Armstrong argued that removing these rewards would only serve banks. “They’re just mad that they’re losing,” he said, stressing that competition benefits consumers. He explained that the push to ban rewards is a disguised bailout for financial institutions that once failed the public.
Pro-XRP lawyer John Deaton echoed this view and sharpened it, calling banks “enemies of ordinary people.” He recalled their role in the 2008 financial crisis, reminding lawmakers that households lost homes while bankers collected bonuses.
Technical Pressure Around Stablecoin Rewards
The GENIUS Act stands at the center of the fight. It bans interest payments on stablecoins but leaves a legal path for rewards. Hence, Armstrong claimed banks are lobbying to close this loophole. He explained that trillions in deposits are at risk of migrating into stablecoins. A Treasury report estimated that as much as $6.6 trillion could shift if rewards remain.
Moreover, banks argue such a migration would cripple their lending power and destabilize the financial system. They frame stablecoin rewards as a national security issue.
Consequently, Armstrong counters that this projection proves the opposite. For him, the figure highlights bank inefficiency, not stablecoin danger. “This is evidence of competition doing its job,” he told Senators.
Voices of Support and Opposition
Deaton stood firmly behind Armstrong. He accused lawmakers of siding with Wall Street’s lobby. He cited figures like Senator Ed Markey as examples of misplaced loyalty.
Additionally, he stressed that banks continue to protect their interests while presenting themselves as defenders of stability. “They are the real enemies of the people,” Deaton said, pointing to their bailout history.
Stablecoin rewards now stand at the crossroads of innovation and banking dominance. The outcome will decide whether consumers keep financial freedom or return to old systems.
