Amrith Ramkumar

Crypto's been coming on for over a decade and crypto companies have been saying we're the future of finance, banks should partner with us, etc.

And banks actually have.

So like JP Morgan and Citi and others do have partnerships with Coinbase and other crypto companies as well.

They are sort of nibbling around the edges, wanting to maybe hedge in case crypto does take off and disrupt some of their

original business.

But the fight that's taking place now is interesting because it's over these rewards or annual payments Coinbase pays holders of a stablecoin offered by Circle through this very unique partnership.

So a stablecoin is a dollar-backed cryptocurrency essentially designed to hold its value.

Coinbase has this weird setup where they're allowed to pay holders on its platform of the Circle stablecoin rewards of, let's say, 3.5%.

at an annual rate.

And so banks are now looking at this and saying, wait a minute, that looks a lot like what I would pay a holder in a checking account.

I would pay them less than 0.1%.

But now you're offering these people 3.5% to just hold their cash there, essentially.

So that's created this fight that's really erupted in the last month or so in Washington.

So in mid-January, there was supposed to be a markup, a committee vote by the Senate Banking Committee on this market structure bill.

This bill has been in the works for years, but they could not agree on several key things.

Probably most importantly, this banking versus crypto fight over whether Coinbase and crypto exchanges can pay holders of stablecoins rewards.

And so the day before the markup, Brian Armstrong had a bunch of meetings with senators and he did not like the bill text.

So Armstrong puts out on social media on X, he says, Coinbase can't support this bill because of these reasons.

So the committee then cancels the vote several hours later.

And it's not really clear what the path is to get back on track.