Leading US banks are initiating early trials with stablecoins, crypto 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 did not specify which banks are involved but cautioned that those slow to embrace crypto “are going to get left behind.” He made these comments during a panel discussion alongside BlackRock CEO Larry Fink. Despite their past disagreements on crypto, Armstrong and Fink found common ground regarding Bitcoin.
Armstrong dismissed the notion that Bitcoin might drop to zero, while Fink acknowledged a significant “use case” for the asset. However, he did caution that Bitcoin is “still heavily influenced by leveraged players.”
Launched in January 2024, BlackRock’s iShares Bitcoin Trust (IBIT) is currently the largest spot Bitcoin ETF, with a market cap exceeding $72 billion, according to CoinMarketCap data.
Additionally, BlackRock manages the largest tokenized US Treasury product by market cap, currently overseeing approximately $2.3 billion in assets, based on data from RWA.xyz.
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The battle between banks and Coinbase
Although Brian Armstrong mentioned that Coinbase and several major banks are working together, their relationship has soured in recent months.
In August, the Banking Policy Institute, chaired by JPMorgan’s Jamie Dimon, cautioned Congress that stablecoins could jeopardize the banking sector’s credit model. They urged lawmakers to amend the GENIUS Act, arguing that a capital shift from fiat deposits to stablecoins could raise lending costs and limit credit to businesses.
Traditional banks are largely focused on what they see as a “loophole” in the US GENIUS Act, which prohibits stablecoin issuers from offering yield while allowing third parties, like Coinbase, to do so.
In September, Armstrong conveyed to Fox Business that Coinbase intends to transform into a “super app,” encompassing everything from credit cards to payment solutions and rewards. He criticized the traditional banking system as outdated, citing the “three percent” fees imposed on credit card usage.
Banks have actively opposed Coinbase as well. 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, claiming that Coinbase’s crypto-custody model lacks sufficient testing.
In response, Coinbase’s chief legal officer Paul Grewal remarked on X:
“It’s another case of bank lobbyists trying to dig regulatory moats to protect their own. From undoing a law to go after rewards to blocking charters, protectionism isn’t consumer protection.”
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