Coinbase Hits Back: Banks Accused of Trying to Kill Stablecoin Rewards

The crypto-banking feud escalated on November 14, 2025, as Coinbase fired back at U.S. banking lobbies for lobbying to outlaw merchant rewards on stablecoin payments, branding the push “un-American” and a blatant bid to safeguard $180 billion in annual card fees. In a fiery policy blog post, the exchange accused groups like the American Bankers Association (ABA) and 52 state associations of illegally expanding the GENIUS Act’s interest ban to crush innovation in digital dollars like USDC.

Under the 2024 GENIUS Act, stablecoin issuers can’t pay direct interest, but third-party perks—like cashback or discounts for USDC use—remain legal. Banks now claim these “indirect interest” incentives, even from unrelated merchants, violate the law if tied to issuers via APIs or partnerships. Their November 4 letter to Treasury warned of $6.6 trillion in deposit flight, gutting community lending by $1.5 trillion and slashing small business credit by $110 billion. ABA’s Jess Sharp admitted the “well-resourced” crypto foes pose a tough fight, while EVP John Court fretted over neutered loan capacity.

Coinbase’s chief policy officer Faryar Shirzad retorted on X: Regulators must “stick to the statutory text,” not let banks dictate consumer choices. “This overreach threatens payment innovation,” he wrote, noting stablecoins slash merchant fees by enabling instant, low-cost settlements—unlike card networks’ 2-3% gouge. CEO Brian Armstrong, echoing September’s Capitol Hill rally, slammed banks for “boogeyman” fears: “They’re protecting monopolies, not the economy.” Allies like Kraken and the Blockchain Association back the charge, urging Congress to shield rewards that drive USDC’s global surge.

The stakes? Banning perks could herd users back to low-yield bank accounts (1-3.5% vs. USDC’s competitive AER), stifling Web3 adoption amid Circle-Coinbase’s regulatory wins. X buzz lit up: “Coinbase fighting for cashbacks while TradFi fights for lunch money,” quipped one user. As Treasury weighs in, a federal stablecoin bill looms—will it level the field or entrench banks? Crypto’s not yielding ground.