Coinbase CEO Brian Armstrong has pushed back against claims from traditional banks that stablecoin rewards are undermining the banking system. Armstrong argues that banks are creating “boogeyman” issues by raising fears about stablecoins eroding bank deposits and threatening core activities like lending.

Banks have recently voiced concerns that the growing popularity of stablecoins could lead depositors to move their money out of traditional accounts and into digital tokens. The American Bankers Association has warned that such a shift could weaken the ability of banks to make loans to consumers and businesses. Despite these warnings, Coinbase contends that the real motivations behind these claims are financial. Stablecoins could potentially disrupt the massive annual revenue banks earn from transaction fees, especially from credit and debit card “swipe” fees.

Coinbase’s own white paper pushes back on the idea that stablecoins pose a threat to bank deposits, describing it as a myth. Their analysis points out that most stablecoin activity occurs internationally, minimizing any impact on U.S. banks. Furthermore, research cited by Coinbase indicates there has been no significant negative correlation over the last four years between the growth of stablecoins and U.S. bank deposits, even among community banks.

Instead of treating stablecoins as a threat, Armstrong encourages banks to embrace this innovation. He suggests that stablecoins have the potential to transform banking by enabling instant transactions, reducing costs associated with international banking, and making payments possible around the clock.

As stablecoins and crypto technology continue to develop, government agencies are showing signs of support for more innovation in the sector—although regulatory scrutiny is also increasing, particularly for crypto ATMs due to concerns about scams. Coinbase remains firm in its position that rather than destabilizing banks, stablecoins represent an opportunity for the financial sector to improve and adapt for the future.