Crypto Exchange Coinbase has slammed US banking groups for asking regulators to ban merchant rewards, cashbacks and discounts offered to customers who pay with StableCoins, calling the request “Unamerican.”
The dispute relates to the statutory language of Genius Act, that prohibits stablecoin issuers from offering interest or yield to token holders, but it does not explicitly extend the ban to crypto exchanges or affiliated businesses.
Banking groups claim an “indirect interest” arises when a third-party benefits financially and has a connection to the StableCoin Issuer. Coinbase Chief Policy Officer Faryar Shirzad, however, strongly contradicted that view in a Post at X on Thursday and called on regulators to “stick to the law that is within the law.”
“There’s something UnAmerican about bank lobbyists pressuring regulators to tell StableCoin customers what they can and can’t do with their own money after it’s issued.”
Banking groups are seemed concerned The widespread adoption of stable-bearing stablecoins may weaken the Banking systemwhich rely on banks attracting deposits with high-interest products to back the loans they make.
StableCoins hopes to draw blood from banking
Widespread stablecoin adoption could result in more than $6.6 trillion in deposit outflows From the traditional banking system, according to an estimate by the US Treasury Department in April.
Coinbase argued that StableCoins could wipe out more than $180 billion in card fees paid by US merchants by 2024; However, the “big banks” will continue to stand in the way and prevent StableCoin innovations from challenging the traditional payment system.
Related: 21Shares launches Crypto Index ETF under SEC’s Act 40
“If third parties are prevented from providing these benefits, consumers will be less likely to see StableCoins as a viable payment alternative, and merchants will continue to pay hefty fees.”
Centralized exchanges benefit when stablecoin trading soars
Companies like Benefit from Coinbase from the adoption of StableCoin, as they earn fees from increasing trading volume on their exchange.
Many crypto exchanges have issued credit cards to incentivize merchant spending with cashback and crypto rewards — an offering Shirzad fears is under threat but remains optimistic that “common sense will prevail.”
Magazine: 2026 is the year of pragmatic privacy in crypto: canton, zcash and more
