Late-February Deadline… Banks vs. Coinbase Clash Over Stablecoin Interest

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The U.S. banking sector has launched a covert campaign directly targeting Coinbase in an effort to permanently ban interest earnings on stablecoins, igniting an all-out war between traditional finance and the digital asset industry.

Nic Puckrin, co-host of the crypto YouTube channel Coin Bureau, said in a video released on February 11 (local time) that the Independent Community Bankers of America (ICBA) has labeled Coinbase CEO Brian Armstrong as public enemy number one and is waging an aggressive advertising campaign. The ICBA is pressuring senators to impose a blanket ban on yield payments for stablecoins.

Behind the banking sector’s aggressive stance lies fear of massive capital outflows. According to the ICBA’s own data, if funds begin moving into stablecoins in earnest, as much as $1.3 trillion in community bank deposits could be eroded, potentially reducing local lending capacity by approximately $850 billion. While the average interest rate on U.S. bank savings accounts currently stands at around 0.39%, Coinbase offers yields ranging from 5% to as high as 10.8% through USD Coin (USDC), posing a direct threat to banks’ profit structures.

The conflict is also complicating the legislative process for the Digital Asset Market Clarity Act (CLARITY). Coinbase has withdrawn its support after a provision banning stablecoin yields was included in the bill, maintaining that no legislation is better than bad legislation. Meanwhile, other major players such as Ripple and a16z continue to back the bill, arguing that regulatory clarity is urgently needed, further deepening divisions within the industry.

The White House convened emergency meetings earlier this month to address the legislative impasse, but the banking industry has refused to compromise on the yield ban provision. The administration of President Donald Trump has set a deadline for both sides to reach an agreement by the end of February. If no deal is reached by then, digital asset legislation could be delayed until after 2027, as it would become entangled with the November midterm elections.

At its core, many observers argue the dispute reflects banks’ attempts to protect their traditional interest margin advantages by resisting technological innovation. While concerns remain that capital flight into stablecoins could weaken lending capacity in local economies, critics say banks should compete by offering better rates and technologies rather than relying on regulation. The outcome of negotiations by the end of February is expected to be a critical turning point in determining whether digital asset investors in the United States will be able to earn legitimate returns.

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