A growing clash between traditional banks and crypto companies is putting stablecoin earnings in the spotlight. At the center of the debate is Coinbase CEO Brian Armstrong, who claims big banks are trying to block everyday users from earning returns on digital dollars.
In a recent interview with Fox Business, Armstrong accused major U.S. banks of “undermining” the crypto-friendly agenda of Donald Trump. According to him, banks are pushing for new legislation that would effectively stop platforms like Coinbase from offering yield on stablecoins — a move he says protects bank profits at the expense of consumers.
What’s the Fight About?
The dispute revolves around two key bills: the GENIUS Act and the CLARITY Act. Under current rules in the GENIUS Act, stablecoin issuers must fully back their tokens with cash or short-term U.S. Treasuries. They are not allowed to directly pay interest to users.
However, platforms such as Coinbase have found a workaround. By using rewards programs, they pass on a portion of the returns earned from Treasury reserves — typically around 4–5% — to users holding stablecoins like USDC.
Now, a proposed update to the CLARITY Act could shut this down entirely. The new draft aims to ban any form of yield on stablecoins, whether direct or indirect, including rewards that resemble interest. Coinbase has already pushed back, stating it “cannot support” the current proposal.
Why Banks Are Concerned
Traditional banks argue that allowing stablecoins to offer yields could trigger a massive shift of deposits into crypto. Some estimates suggest banks could lose hundreds of billions of dollars if users move their money to higher-yielding digital alternatives.
This could especially hurt smaller banks, which rely heavily on deposits to fund loans. As a result, banking lobby groups are pushing lawmakers to close what they see as a dangerous loophole.
Big Money at Stake
The financial stakes are huge. Coinbase reported around $1.35 billion in stablecoin-related revenue in 2025 — about 19% of its total earnings. This income largely comes from interest generated on reserves backing USDC, which are invested in U.S. Treasuries.
The stablecoin market itself is also booming. Total transaction volume hit an estimated $33 trillion last year, with USDC alone accounting for roughly $18.3 trillion. Analysts believe that if adoption continues to grow, Coinbase’s stablecoin revenue could increase multiple times over in the coming years.
Trump Backs Crypto Firms
President Trump has openly supported crypto companies in this debate. In public statements, he has accused banks of trying to “hold back” innovation and block Americans from earning returns on their money. He has also urged lawmakers to move forward with crypto-friendly regulations quickly.
What Happens Next?
The outcome of this battle could reshape the future of stablecoins in the U.S. If the proposed rules pass, stablecoins may function more like traditional digital cash with little to no yield. But if crypto firms win, they could continue offering competitive returns — potentially drawing even more users away from banks.
For now, the fight over stablecoin yields is becoming one of the most important issues in U.S. crypto regulation, with both sides pushing hard to protect their interests.
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