Coinbase is pushing back hard as major banks aim to strip stablecoin holders of rewards, spotlighting rising crypto adoption, surging yields, and a bruised traditional finance sector.
Stablecoin Rewards Under Fire With Coinbase Accusing Banks of Bailout Play
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Coinbase Slams Banks Over Stablecoin Rewards Battle
Tensions between traditional finance and digital asset firms are escalating as policy debates over stablecoin rewards heat up. Coinbase (Nasdaq: COIN) shared on social media platform X on Sept. 29 that banks are pressing for measures that would prevent customers from earning rewards on stablecoin holdings. The crypto exchange framed the effort as an attempt to secure a bailout for traditional banks while undermining consumer benefits and suppressing competition.
Coinbase posted:
The big banks are coming for another bailout by attacking crypto. They don’t want you to earn rewards on your stablecoin holdings.
“Our take: competition = better options for consumers. If you wouldn’t ban credit card rewards, don’t ban crypto rewards,” Coinbase added. Chief legal officer Paul Grewal expanded on this position, stating: “Big banks are trying to undo law. They want a bailout because competing with products that too often suck is, well, hard. Stablecoin rewards need to stay. This bill is on the books for a month and is now the law.”
Coinbase’s business model includes offering rewards for holding USD Coin (USDC), a stablecoin pegged to the U.S. dollar. Eligible customers automatically receive variable rewards funded by Coinbase, making the program a form of passive income. Coinbase recently introduced 4.1% USDC rewards for Canadian customers, a rate that stands in contrast to near-zero returns offered by many Canadian bank savings and chequing accounts.
Chief executive Brian Armstrong also weighed in with a sharper critique. He posted:
Hypocrisy from banks is causing problems for crypto again. Banks want to remove your ability to earn rewards when holding stablecoins. Competition is good for consumers. They’re just mad that they’re losing. Big banks don’t need another bailout, they need better products.
He continued: “USDC rewards are law under the GENIUS Act, but banks want undo them to maintain their monopoly.” Armstrong encouraged users to contact lawmakers through the Stand With Crypto campaign to oppose what he described as bank bailouts. Crypto advocates argue these programs represent healthy competition, while critics warn that such incentives require stronger oversight to prevent systemic risks.
