Coinbase Faces Banking Backlash as Community Banks Push GENIUS Act Amendment to Block Stablecoin Yield Programs

In a significant regulatory escalation, community banks are mobilizing against cryptocurrency exchanges through proposed legislative changes that could reshape the competitive landscape for yield-bearing stablecoin products. The American Bankers Association's Community Bankers Council has formally petitioned Congress to amend the 2024 GENIUS Act, specifically targeting what traditional financial institutions describe as a regulatory loophole exploited by major platforms including Coinbase and Kraken. This development, emerging in early 2026, represents a pivotal moment in the ongoing tension between traditional banking and digital asset innovation. The core conflict centers on yield-generating stablecoin programs offered by crypto exchanges, which banks allege could divert billions of dollars from conventional deposit accounts. Community banks argue that these programs operate with a competitive advantage because they allegedly sidestep the stringent regulatory capital, liquidity, and insurance requirements imposed on traditional banking institutions. The proposed amendment seeks to explicitly restrict non-bank entities from offering interest or yield on stablecoin deposits, effectively forcing these products to operate under banking regulations if they wish to continue. For Coinbase and similar platforms, this legislative push poses a direct threat to a growing revenue stream and a key product offering that attracts users seeking returns on their digital dollar holdings. The banks' campaign frames the issue as one of regulatory parity and consumer protection, suggesting that without equivalent safeguards, consumers face heightened risk. The cryptocurrency industry is likely to counter that these programs represent financial innovation, providing access to yield in a transparent, accessible manner that traditional banking has failed to deliver, particularly in a higher interest rate environment. This move by community banks signals a strategic shift from mere criticism to active legislative action, reflecting deepening concerns over deposit erosion. The outcome of this effort could establish critical precedents for how stablecoins—increasingly seen as a bridge between traditional and digital finance—are regulated. As both sides prepare for what may become a heated congressional debate, the battle over the GENIUS Act amendment will test the political influence of the established banking sector against the growing economic footprint of the cryptocurrency industry, with Coinbase squarely in the crosshairs.

Community Banks Seek GENIUS Act Amendment to Restrict Stablecoin Yield Offerings

Community banks are escalating their fight against crypto exchanges over stablecoin yields. The American Bankers Association’s Community Bankers Council has formally requested Congress to amend the 2024 GENIUS Act, targeting what they call a regulatory loophole exploited by platforms like Coinbase and Kraken.

At issue are yield-bearing stablecoin programs that banks claim could siphon billions from traditional deposits. The Banking Policy Institute estimates potential outflows reaching $6.6 trillion—a staggering figure that WOULD cripple community lenders’ ability to finance Main Street businesses.

Crypto advocates counter that these concerns are exaggerated. The Blockchain Association maintains that stablecoin rewards represent legitimate financial innovation, giving consumers alternatives to near-zero interest rates at traditional banks.

Barclays Invests in Ubyx to Shape the Future of Digital Currency Infrastructure

Barclays has made a strategic investment in Ubyx, a US-based stablecoin settlement initiative, signaling its commitment to regulated tokenized money infrastructures. This marks Barclays' first direct financial involvement with a stablecoin-focused company, aligning with its broader strategy to develop compliant digital currency solutions.

The investment underscores Barclays' focus on infrastructure and settlement layers rather than direct stablecoin issuance. Sources indicate the bank aims to collaborate with Ubyx on regulatory-friendly tokenized money models, with a long-term vision of creating auditable digital currency systems that integrate with traditional finance.

Ubyx, founded in 2025, operates a clearing system for stablecoin transactions. The company previously secured $10 million in seed funding from notable investors including Galaxy Ventures, Coinbase Ventures, and Founders Fund.

Barclays Enters Stablecoin Market With Strategic Ubyx Investment

Barclays, managing $2.2 trillion in assets, has taken its first step into the stablecoin arena by investing in Ubyx Inc., a U.S.-based clearing system for tokenized deposits and regulated stablecoins. The move, announced on January 7, 2026, underscores the bank's commitment to enhancing interoperability across tokens, blockchains, and digital wallets as digital money adoption gains momentum.

Ubyx CEO Tony McLaughlin predicts a future where banks routinely offer digital wallets alongside traditional accounts. Barclays joins Galaxy and Coinbase Ventures in Ubyx's $10 million seed round, signaling growing institutional interest in stablecoin infrastructure.

Coinbase Executive Warns of Rising Quantum Security Risks for Bitcoin

Quantum computing advancements are casting a shadow over Bitcoin's cryptographic foundations. Researchers estimate 6.51 million BTC—particularly those held in legacy addresses—could be vulnerable to attacks as quantum machines gain the ability to exploit exposed public keys during transaction windows.

The threat isn't theoretical anymore. David Duong of Coinbase notes quantum processors may soon compromise both Elliptic Curve Digital Signature Algorithm (ECDSA) protections and SHA-256 mining security. BlackRock's recent regulatory filings echo these concerns, signaling institutional recognition of the challenge.

Developers are exploring coordinated network upgrades to post-quantum cryptography, but debates rage about timelines. Governments accelerating quantum standards add urgency—what was once a distant threat now demands strategic mitigation.