Coinbase Collaborates with Major U.S. Banks

During his appearance at the New York Times Dealbook Summit, CEO Brian Armstrong announced that prominent U.S. banks are collaborating with Coinbase on initial projects related to stablecoins, cryptocurrency custody, and the trading of digital assets.

While he refrained from naming any specific banks, Armstrong cautioned that those institutions slow to embrace cryptocurrencies “will be left behind,” as noted by Bloomberg. His comments were made alongside BlackRock CEO Larry Fink during a panel discussion at the event. Interestingly, despite their differing views on cryptocurrencies, both seemed to share a similar perspective on Bitcoin.

Armstrong rejected the notion that Bitcoin could ever drop to zero. Meanwhile, Fink acknowledged the significant “use cases” emerging for Bitcoin, but emphasized its vulnerability to fluctuations driven by leveraged players.

Notably, BlackRock’s iShares Bitcoin Trust (IBIT), which was launched in January 2024, is now the leading spot Bitcoin ETF, boasting a market cap exceeding $72 billion, per CoinMarketCap data.

Additionally, BlackRock manages the largest tokenized U.S. Treasury product by market cap, currently overseeing around $2.3 billion in assets, according to RWA.xyz.

Shift in Dynamic Between Banks and Coinbase

Despite Armstrong’s optimistic comments about cooperative efforts, tensions between Coinbase and some large banks have escalated recently.

In August, the Banking Policy Institute, led by JPMorgan’s Jamie Dimon, alerted Congress that stablecoins could threaten the banking sector’s credit framework. They urged legislators to reinforce the GENIUS Act, arguing that capital migration from traditional fiat deposits to stablecoins may drive up financing costs and diminish available credit for businesses.

Traditional banks are particularly worried about what they perceive as a “loophole” in the U.S. GENIUS legislation, which prohibits stablecoin issuers from providing yield while allowing entities like Coinbase to do so.

In September, Armstrong expressed to FOX Business that Coinbase’s goal is to supplant traditional banks by evolving into a “super app” with a range of offerings, including credit cards, payments, and rewards. He critiqued the traditional banking system as outdated, highlighting the “3 percent” fee incurred with every credit card transaction.

Banks have also taken a stand against Coinbase directly. In November, a group of independent community bankers urged the Office of the Comptroller of the Currency to reject Coinbase’s application for a national trust charter, arguing that the exchange’s crypto custody approach is unproven.

In response, Paul Grewal, Coinbase’s chief legal officer, remarked on X: “This is another case of bank lobbyists trying to dig regulatory moats to protect what’s theirs. From tearing down laws and targeting rewards to blocking charters, protectionism is not consumer protection.”