Hello my dears,
Perhaps the headline should not read.
"US banks tangle with Coinbase"
Banks are seeing more and more capital flowing into crypto. And now they are trying to prevent it in this way.
Perhaps the banks should try more innovation.
Feel free to share your opinion in the comments.
There is a dispute between US banks and the crypto industry. The focus is on rewards offered by Coinbase and Co. on stablecoins.
- In the US, the air is thick between the crypto and banking industries. The point of contention: stablecoins. Specifically, it is about the rewards that holders of USDC and Co. can receive on crypto exchanges.
- Coinbase CEO Brian Armstrong has now taken this as an opportunity to hit back. During a hearing before the US Congress, he rejected criticism. Armstrong accused the institutions of using "bogus arguments" to defend their market position.
- Specifically, it is about rewards for holding stablecoins such as USDC. Coinbase currently offers a yield of 4.1 percent, while competitor Kraken even offers 5.5 percent.
- Banking lobbies such as the American Bankers Association are urging Congress to ban such models. They argue that customer funds would be withdrawn from traditional deposits and shifted into stablecoins. This would weaken banks' ability to lend to the real economy.
- According to a report by the Treasury Borrowing Advisory Committee, up to USD 6.6 trillion could theoretically flow out of bank deposits into stablecoins.
- Armstrong rejected this as unfounded: "The banks just want to protect their 180 billion US dollars in revenue from payment transactions," he told CNBC. The issue is being driven by large institutions, not smaller regional banks.
- The debate is closely linked to the GENIUS Act passed in the summer. Although it prohibits interest payments on stablecoins, it explicitly allows rewards programs such as those offered by Coinbase and Kraken.
- The issue is controversial within the Senate. While banking associations continue to exert pressure, Senator Cynthia Lummis, for example, believes the issue has been resolved. The balance between banks and crypto providers has been found with the GENIUS Act.
- Leading bankers such as JPMorgan CEO Jamie Dimon have recently expressed caution. Although they are not fundamentally opposed to crypto, regulations must be "carefully considered".
- Crypto associations, on the other hand, criticize that a ban on rewards would "distort the playing field in favour of outdated institutions" and deprive consumers of the opportunity to benefit from stable returns.
