Coinbase co-founder and CEO Brian Armstrong claimed that major U.S. banks are trying to undermine Donald Trump’s pro-crypto agenda. He warned that proposed changes to a Senate market structure bill could slow economic growth by stifling innovation, limiting certain cryptocurrencies, and preventing Americans from earning interest on their stablecoins.
During an in-depth interview with Fox Business under the host of Maria Bartiromo on Mornings With Maria, Armstrong highlighted that the most recent version of the Senate Banking Committee’s proposed legislation serves the interest of banks, therefore, cautioned that this could result in over-regulation, ending up harming recent bipartisan moves concerning crypto policy.
Consequently, the industry executive stated that Coinbase carefully reviewed the Senate Banking Committee draft over the last 48 hours and concluded that it cannot support the bill in its current form.
To further explain this decision, the CEO indicated that specific parts of the bill would come close to prohibiting tokenized securities, implement comprehensive regulatory constraints on the DeFi sector, weaken the Commodity Futures Trading Commission (CFTC), and eliminate rewards for stablecoins.
Armstrong expressed gratitude for the Senate’s collective efforts, particularly those of Senators Tim Scott and Cynthia Lummis. However, the industry executive sparked concern after alleging that the draft shared recently posed serious threats that would be difficult to address upon reaching a final vote on the Senate floor.
According to him, the primary issue concerns the rewards associated with stablecoins. Regarding this problem, Armstrong asserted that recently enacted crypto regulations, such as the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins Act), which Trump signed into law, permitted stablecoin issuers to offer interest. He perceived this as crucial for enabling Americans to acquire returns on their investments.
“The banks are really trying to undermine the president’s crypto plans,” Armstrong stated. “They want to protect their profits by taking money from hardworking Americans and putting it into the hands of big banks that are making record profits.”
Afterwards, Coinbase’s CEO contrasted stablecoins that the GENIUS Act requires to be fully backed by short-term US Treasuries with traditional fractional-reserve banking, arguing that cryptocurrencies pose minimal risk to the financial system. To further elaborate on this point, he stated that these stablecoins do not rely on fractional reserves; therefore, they should not be regulated similarly to banks.
Following his remarks, host Bartiromo asked Armstrong whether crypto platforms should be subject to regulations similar to those of banks. Examples of these regulations include deposit insurance and safeguard measures for investors.
Responding to this question, he noted that these regulations primarily aim to manage risks associated with fractional-reserve lending, and that FDIC insurance covers deposits up to $250,000 per depositor.
“If customers choose to lend out their funds, they can do so,” he said. “You don’t need a bank license for that. A bank license is necessary when you lend someone else’s money without their permission.”
Armstrong expressed disapproval of the proposed change regarding the CFTC and the SEC
Some analysts raised concerns that stablecoins pose a serious risk to community banks. Nonetheless, Armstrong called this claim false, describing it as a calculated distraction employed by major financial institutions.
Based on his argument, assertions that stablecoins are draining community bank deposits lack substantiated evidence, and he noted that the consolidation driven by major banks poses a far greater risk since the Dodd-Frank era.
Moreover, the industry executive condemned the Senate proposal that would make the CFTC subordinate to the SEC. In this approach, digital assets must pass through SEC oversight before potentially falling under CFTC control.
“I can’t understand why the Senate Ag Committee would make the CFTC a subsidiary of the SEC,” he said, citing the CLARITY Act, which the House passed.
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Source: https://www.cryptopolitan.com/big-banks-undermining-trumps-crypto-agenda/
