Coinbase CEO Predicts US Banks Will Demand Interest-Paying Stablecoins

Forget waiting for the Fed—the real yield revolution might start with your stablecoin wallet.

The New Yield Chase

Traditional banks offer savings rates that barely beat inflation—if they beat it at all. Meanwhile, decentralized finance protocols consistently deliver yields that make traditional products look like financial artifacts. The gap creates pressure no institution can ignore forever.

Banking's Inevitable Pivot

When clients can earn 5% on a digital dollar versus 0.5% in a savings account, the value proposition crumbles. Banks face a simple choice: adapt their offerings or watch deposits migrate to on-chain alternatives. Integrating yield-bearing stablecoins becomes less an innovation and more a defensive necessity.

The Regulatory Tightrope

This shift won't happen in a regulatory vacuum. Expect scrutiny on how these yields are generated, disclosures around risk, and debates over whether they constitute securities. The path forward will be carved by both market demand and legislative compromise.

A Cynical Take

It's the ultimate irony—banks may finally offer competitive returns not out of generosity, but because a technology designed to bypass them forced their hand. Sometimes progress needs a stick, not a carrot.

The race isn't about who creates the next blockchain. It's about who bridges the old world of finance with the new one—and captures the value in between.

TLDR

• Brian Armstrong believes US banks will eventually support interest on stablecoins.
• Armstrong predicts banks will switch to issuing tokenized dollars for yields.
• Coinbase CEO criticizes banking lobby efforts to amend the GENIUS Act.
• Stablecoin yield loophole sparks regulatory battle between banks and crypto firms.

Brian Armstrong, the CEO of Coinbase, has predicted that US banks, which are currently opposed to the idea of yield-generating stablecoins, will eventually shift their stance. Armstrong suggests that banks will lobby Congress in the coming years to allow stablecoin issuers to pay interest directly to holders. This prediction challenges the current position of the banking sector, which is fighting to strip the yield-generating features from stablecoins under the GENIUS Act.

The GENIUS Act and its Impact on Stablecoins

Signed into law in July 2025, the GENIUS Act aims to regulate stablecoins, specifically prohibiting issuers like Circle and Tether from offering direct interest payments on these digital assets. The law, however, allows platforms like exchanges to pass on Treasury reserve yields to users.

This provision has sparked concern among banks, who see these non-bank platforms offering competitive yields of 4% to 5% on cash equivalents, which challenges the low-cost deposit models that traditional banks rely on.

Banking lobbyists are pushing lawmakers to amend the GENIUS Act to close this loophole. Their primary argument is that the ability to pass Treasury yields directly to users without the involvement of banks creates an unfair advantage for crypto platforms. Without interest payments on stablecoins, commercial banks are left with limited options to compete for capital, leading to potential profit erosion.

Armstrong Criticizes Banking Lobby’s Position

Armstrong has publicly criticized the banking sector’s efforts to amend the GENIUS Act. In a post on X, he stated, “The effort to change the law is a red line for the crypto industry.” He emphasized that banks are using “mental gymnastics” by citing safety concerns while continuing to offer below-market deposit rates to their customers. Armstrong believes that the ongoing lobbying is futile and that the industry should focus on the inevitable market evolution.

Exactly – I’m actually impressed the banks can lobby for this with a straight face and not get kicked out of senator’s offices. It takes some serious mental gymnastics.

We won’t let anyone reopen GENIUS. Red line issue for us. And will keep advocating for our customers and the… https://t.co/6EfF2oBn5A

— Brian Armstrong (@brian_armstrong) December 26, 2025

He predicts that banks will soon realize they must adopt digital assets and tokenized dollars to capture the yield spread directly. Instead of trying to close the loophole in the GENIUS Act, Armstrong suggests that banks should pivot and start issuing their own tokenized dollars to remain competitive.

The Future of Stablecoins and Banks

According to Armstrong, the fight over stablecoin regulation is not just a matter of regulatory oversight but a clash between traditional banking practices and the future of financial technology. While banks are currently trying to protect their low-cost deposit base, Armstrong believes that market forces will eventually push them to embrace blockchain technology and digital assets.

As the crypto industry continues to grow, Armstrong predicts that banks will no longer be able to avoid the yield capabilities of stablecoins. Instead, they will need to adapt to the changing financial landscape by incorporating digital assets and tokenized dollars to maintain their position in the market.

Until this shift occurs, companies like Coinbase are committed to defending the current stablecoin framework, which allows them to serve as high-yield intermediaries between users and the underlying Treasury reserves.