Coinbase CEO Brian Armstrong predicts US banks will reverse their stance on stablecoin regulation and eventually lobby Congress to permit interest payments on these digital assets.

Armstrong’s forecast, posted December 27 on X, contradicts the banking sector’s current efforts to strip yield-generating features from the GENIUS Act.

Armstrong Predicts Banks Will Reverse Course on Stablecoin Interest Bans

He argued that lenders are currently protecting low-cost deposits but will be forced to adopt the technology to compete for capital.

“My prediction is the banks will actually flip and be lobbying FOR the ability to pay interest and yield on stablecoins in a few years,” Armstrong wrote.

The prediction reframes the current legislative battle over the GENIUS Act as more than a regulatory dispute. It presents the fight as a collision between legacy profit protection and inevitable market evolution.

The GENIUS Act, signed in July 2025, prohibits stablecoin issuers such as Circle and Tether from paying interest directly to holders.

However, it permits intermediaries—such as exchanges—to pass yield from the underlying Treasury reserves to users.

Due to this, banking lobbyists are petitioning lawmakers to reopen the legislation and close this loophole.

They argue that non-bank platforms can now offer near risk-free Treasury yields of roughly 4% to 5% on liquid cash equivalents. In that environment, commercial banks struggle to compete without raising deposit rates and compressing their net interest margins.

However, Armstrong characterized attempts to amend enacted law as a “red line” for the crypto industry.

He criticized the banking lobby’s approach as “mental gymnastics.” He pointed to the contradiction of citing safety concerns while defending a business model built on paying depositors below-market rates.

The Coinbase CEO also described the current lobbying spend by banking trade groups as “100% wasted effort.”

Notably, a coalition of 125 crypto companies, including Coinbase, recently submitted a letter to the Senate Banking Committee opposing any revisions. The group argued that reopening the bill would undermine regulatory certainty.

Armstrong’s position implies that banks will eventually lose the ability to hold deposits at near-zero rates. Instead, they would issue their own tokenized dollars to capture the yield spread directly.

Until that pivot occurs, Coinbase and its peers intend to defend the existing framework that allows them to serve as the high-yield interface for dollar holders.

The post Coinbase CEO Says Banks Will Eventually Demand Interest-Paying Stablecoins appeared first on BeInCrypto.