Coinbase Brian Armstrong and other Crypto executives took him to Capitol Hill this week as part of a regulated showdown between the industry and the bank, potentially limited to trillions of times.
Bank advocacy groups are urging lawmakers to prohibit lawmakers from offering clients compensation structured like payments of interest provided by banks.
“I don’t know why the banks want to lift it up again at this point, but they should have to compete in Crypto’s equal arena,” Armstrong told CNBC on Wednesday.
Coinbase is currently offering a 4.1% reward for those who hold USDC Stablecoin. Kraken offers 5.5% at USDC Holdings.
Under the recently passed genius law, customers cannot gain interest in Stablecoins, but exchanges can provide rewards.
Bank advocacy groups warn that by allowing compensation, they will be calling for funds from community banks and rushing customers who put them in stubcoins and other codes.
“If people are withdrawing deposits from their bank accounts and transferring them to stable investments, they are continuing to lend to the real economy, supporting economic growth and castrating to some degree their ability to fuel them.”
The Treasury Borrowing Advisory Committee estimated in its April report that $6.6 trillion could be moved from deposits to stablecoins.
Armstrong called the argument “Boogie Man.”
“The real reason they bring this into question is because they’re trying to protect the $180 billion they’ve made in their payment business,” he said. “This is something that big banks are funding behind the scenes. It’s not a small bank.”
Following a meeting with Senate Republicans on Wednesday, jpmorgan chain CEO Jamie Dimon said the subject of Stablecoin Rewards did not appear, but regulators need to be thoughtful about regulations.
“We’re not against cryptography,” he said.
The American Bankers Association and the State Association asked lawmakers on August 12 to “close this loophole and protect the financial system.”
The Crypto Group fought back with its own letter to lawmakers a few days later, saying that preventing the exchange from offering rewards would “tip the arena in favor of legacy institutions that can provide competitive revenue and not be able to steal meaningful choices to consumers, especially large banks.”
The senators have released several drafts of the market structure bill, but changes to the crypto exchange that will provide compensation are still being resolved.
Sen. Cynthia Lumith, bank chair Tim Scott (R-Wyo working on a bill with Rs.C.), said he believes the issue is resolved.
“This issue is being sued under the genius law and I support the compromises achieved by the banks and the digital asset industry,” she said in a statement to CNBC. “I don’t think we should resume this issue.”
