Coinbase CEO Takes On Banks Over Stablecoin Rewards

Coinbase CEO Brian Armstrong is pushing back against attempts to regulate stablecoin rewards in the same way as bank-deposit interest. He argues that fully reserved stablecoins, such as USDC, pose fundamentally different risks from fractional-reserve banking.

In a recent interview, Armstrong explained that USDC rewards pass through part of the economic return generated by the assets backing the stablecoin, including short-term U.S. Treasuries. 'If you want to hold a stablecoin, you could actually earn reward,' he said.

The distinction matters because stablecoin rewards have emerged as a major battleground in Washington, with banks warning that higher-paying digital dollars could pull deposits from the traditional financial system. Armstrong drew a sharp line between USDC rewards and deposit interest, saying 'We're not engaging in fractional reserve lending.'