Coinbase CEO Urges Banks to Start Competing

During his appearance at the World Economic Forum, Coinbase CEO Brian Armstrong took aim at the banking sector’s lobbying efforts. 

He has told CNBC’s Squawk Box that incumbent financial institutions are using regulatory capture to stifle the growth of the stablecoin market.

The “level playing field” argument

The ability of stablecoin issuers to pass rewards on to consumers is at the heart of the dispute. Armstrong argues that legislative hurdles are being put in place specifically to insulate banks from this competitive pressure.

“I think Americans should be able to earn more money on their money,” Armstrong said. “Banks should have to compete on a level playing field.”

If consumers find bank interest rates lacking compared to stablecoin offerings, the market should dictate the outcome instead of regulation. 

“If the American people feel like the banks are not paying high enough interest rates and stablecoin rewards can offer them more, then maybe the banks should have to pay higher interest rates to compete,” he noted. “I don’t think there should be any protectionism.”

Stalled legislation 

As reported by U.Today, Coinbase recently pulled support for the high-stakes bill.

The boss of the leading US exchange has explained that “pretty serious issues” emerged late in the process.

“We saw some draft text midnight on Monday night,” Armstrong explained. “Our lawyers started looking at it on Tuesday… We actually felt like we had an obligation to go out and defend our customer’s rights and say, ‘We have some issues here.” he said.

Armstrong framed the delay as an opportunity to find a “win-win outcome” with banking leaders.

Banning competition 

Despite the friction, Armstrong noted that Coinbase is already deeply integrated with the traditional financial system, providing infrastructure to “five of the top 20 banks in the world.” 

He attributed the regulatory hostility to their political representatives.

“Their lobbying arms and their trade groups are coming in and trying to ban their competition,” Armstrong said. “And so to me, you shouldn’t be able to ban competition.”