Leading US banks are currently conducting preliminary trials focused on stablecoins, cryptocurrency custody, and digital asset trading in collaboration with Coinbase, as stated by CEO Brian Armstrong during The New York Times DealBook Summit.
As reported by Bloomberg, Armstrong refrained from mentioning specific banks but cautioned that those failing to embrace cryptocurrency “will be left behind.” This statement was made during a panel discussion alongside BlackRock CEO Larry Fink. Despite their differing viewpoints on cryptocurrencies in the past, both Armstrong and Fink shared a notably aligned perspective regarding Bitcoin.
Armstrong rejected the notion that Bitcoin could plummet to zero, while Fink acknowledged a significant “use case” for the cryptocurrency, although he did warn that Bitcoin remains “heavily influenced by leveraged players.”
BlackRock’s iShares Bitcoin Trust (IBIT), introduced in January 2024, has now become the largest spot Bitcoin ETF with a market capitalization exceeding $72 billion, according to CoinMarketCap data.
Additionally, BlackRock manages the largest tokenized US Treasury product by market cap, currently overseeing around $2.3 billion in assets, as per RWA.xyz data.
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The conflict between banks and Coinbase
While Brian Armstrong indicated that Coinbase is working alongside several prominent banks, their relationship has become increasingly contentious in recent months.
In August, the Banking Policy Institute, a lobbying organization led by JPMorgan’s Jamie Dimon, cautioned Congress that stablecoins might jeopardize the credit model of the banking industry. The group urged legislators to revise the GENIUS Act, contending that a capital migration from fiat deposits to stablecoins could raise lending costs and limit available credit for businesses.
Traditional banks are particularly worried about what they view as a “loophole” in the US GENIUS Act, which prohibits stablecoin issuers from offering yield but permits third parties, like Coinbase, to do so.
In September, Armstrong conveyed to Fox Business that Coinbase aims to replace conventional banks by evolving into a “super app,” providing a wide array of services from credit cards to payments and rewards. He criticized the traditional banking system as outdated, highlighting the “three percent” fees applied each time a credit card is used.
Banks have also directly confronted Coinbase. In November, the Independent Community Bankers of America urged the Office of the Comptroller of the Currency to deny the exchange’s application for a national trust charter, arguing that Coinbase’s model for crypto custody is unproven.
Paul Grewal, Coinbase’s chief legal officer, responded on X:
“It’s yet another instance of bank lobbyists attempting to create regulatory barriers to safeguard their interests. Whether it’s unwinding a law to target rewards or obstructing charter applications, protectionism is not synonymous with consumer protection.”
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