Coinbase Exec Denounces Banking Lobby’s Stablecoin Push as ‘Un-American’ Overreach

Coinbase warns that banning third-party stablecoin benefits would have unprecedented, far-reaching and unpredictable consequences.

Crypto exchange Coinbase has sharply criticized a group of major US banking associations after they urged federal regulators to ban merchant rewards, cashbacks and rebates offered to customers who pay with stablecoins.

The latter argued that such benefits amount to ‘indirect interest’.

“Un-American” power grab

In a post on X, Coinbase Chief Policy Officer Faryar Shirzad said called called the proposal “un-American” and warned that it represents an overreach that would stifle competition and prevent consumers from using their own money as they choose. The dispute centers on how regulators should implement the GENIUS Act, a federal law passed in July 2025 that prohibits stablecoin issuers, but only issuers, from paying interest or returns to holders.

Banking groups are now putting pressure on regulators to reinterpret that rule and also ban third-party benefits offered by companies that only accept stablecoins.

According to Coinbase’s policy arm, the Coinbase Institute, the banks’ interpretation goes against what Congress intended. The law prohibits stablecoin issuers from paying interest only and makes no mention of affiliates, partners, or any form of “indirect” interest. The CBI article says regulators can monitor issuers, but they cannot control the independent choices of traders, employers, fintechs or property owners.

It warns that the banking lobby’s proposal could have far-reaching and unpredictable consequences, including banning common practices such as merchant discounts on stablecoin payments, employer-funded payroll benefits, or property owners paying interest on tenant deposits simply because those companies also use an issuer’s API or have a fundamental relationship with them.

Coinbase added that the real goal is to protect banks’ payment fee profits, noting that U.S. merchants paid more than $180 billion in card fees last year. The exchange says adopting the banks’ approach would slow the adoption of stablecoins, maintain the current high-fee system and block innovations that could lower costs for consumers and merchants.

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“A sustainable GENIUS Act rule must adhere to the statutory text: issuers must not pay interest or provide returns to stablecoin holders for holding or using the token. The idea of an ‘indirect’ ban is an attempt to suppress demand for stablecoins and thereby protect profits from payments, and there is something un-American about the way bank lobbyists are pressuring regulators to tell stablecoin customers what they can and cannot do with their own money after it has been issued. Common sense must prevail.”

Stablecoins could increase tenfold by 2030

US Treasury Secretary Scott Bessent said the stablecoin market, now worth about $315 billion, could grow tenfold by the end of the decade, thanks to the GENIUS Act. Speaking at the Treasury Market Conference, Bessent revealed how the Treasury Department is rethinking long-term lending as the country’s debt burden grows, stating that both money market funds and stablecoins are expected to play a greater role in future demand for US debt.

His comments mark the first time a Treasury secretary has publicly proposed stablecoins as a potential pillar of federal funding. An increase in stablecoin adoption would also benefit centralized exchanges like Coinbase, which could benefit from increased trading activity.