Brian Armstrong, CEO of Coinbase, challenges the practice of lending client deposits without explicit consent, a mechanism inherited from fractional reserve banking that the Federal Reserve reduced to zero percent in March 2020. The collapse of Silicon Valley Bank in March 2023 illustrated this risk: 42 billion dollars withdrawn in twenty-four hours, with 3.3 billion dollars in USDC reserves from Circle at stake. The GENIUS Act, enacted in July 2025, requires stablecoins to maintain full backing, monthly reserve disclosures, and holder protection in bankruptcy. A Treasury advisory committee estimates that up to 6.6 trillion dollars in deposits could migrate to stablecoins in a worst-case scenario, against a market projected at 2 trillion dollars by 2028. Coinbase has filed for a national trust charter with the OCC, joining Circle, Ripple, Paxos, and Fidelity Digital Assets.
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