Coinbase CEO Brian Armstrong has warned that the reopening of the GENIUS Act would cross a “red line”. He is accusing banks of lobbying Congress to block stablecoin rewards and limit competition. The GENIUS Act bars stablecoin issuers from paying interest directly but allows those platforms to offer some rewards. Armstrong has slammed banks for using political pressure to stifle innovation.
Threat to Stablecoin Rewards
The restrictions imposed by the GENIUS Act on stablecoin rewards have sparked a debate. Some people argue that these restrictions limit innovation. And also it reduces the consumer choice. Max Avery of Digital Ascension Group says that proposed amendments would broadly restrict rewards, also cutting off indirect yield-sharing mechanisms. This move is viewed as an attempt by the banks to protect their interests.
Also Read: Coinbase and Gemini Blocked in Philippines Amid Wider Exchange Clampdown
Impact on Consumers and Innovation
The stablecoin platforms offer users a chance to earn yield and threaten traditional banking models. Avery argues that banks are currently earning 4% on reserves at the Federal Reserve. Meanwhile, the consumers get near-zero interest on their savings.
The future of the GENIUS Act is uncertain. The lawmakers are proposing amendments, while Coinbase is pushing back against them. The US is also considering tax relief for stablecoin payments, which would exempt small transactions from capital gains taxes.
Also Read: BlackRock Shifts $182M Bitcoin, $91M Ethereum to Coinbase Prime
Related Developments
US lawmakers have proposed tax relief for stablecoin payments, which also aims to reduce the tax burden on crypto users. The proposal targets taxation issues around staking and mining, allowing taxpayers to defer income recognition on rewards.
Also Read: Coinbase Report Projects Stablecoin Market Near $1.2 Trillion by 2028
