Coinbase CEO Brian Armstrong and other crypto executives took to Capitol Hill this week as part of a regulatory showdown between the industry and banks with potentially trillions at stake.

Banking advocacy groups are urging lawmakers to prohibit crypto exchanges like Coinbase from offering customers rewards that are structured like interest payments banks offer.

“I’m not sure why the banks would want to bring that up again at this point, but they should have to compete on a level playing field in crypto,” Armstrong told CNBC on Wednesday.

Coinbase currently offers a 4.1% reward for those holding USDC stablecoin. Kraken offers a 5.5% on USDC holdings.

Under the recently passed GENIUS Act, customers can’t earn interest on stablecoins, but exchanges can offer rewards.

Bank advocacy groups are warning that allowing the rewards will lead to a rush of customers yanking funds from community banks and putting them into stablecoins or other crypto.

“If people are pulling their deposits out of their bank accounts and transferring them into stablecoin investments, you are effectively neutering, to some degree, the ability of the banks to continue to lend into the real economy and to support and fuel the economic growth,” said John Court, executive vice president at the Bank Policy Institute, an advocacy group representing banks.

The Treasury Borrowing Advisory Committee estimated that $6.6 trillion could go from deposits to stablecoins in an April report.

Armstrong called the argument a “boogeyman.”

“The real reason that they’re bringing this up as an issue is that they’re trying to protect the $180 billion that they made on their payment business,” he said. “This is something that big banks are funding behind the scenes. It’s not small banks whatsoever.”

Following a meeting with Senate Republicans on Wednesday, JPMorgan Chase CEO Jamie Dimon said the subject of stablecoin rewards did not come up, but that regulators need to be thoughtful about any regulations.

“We’re not against crypto,” he said.

The American Bankers Association and state association asked in an August 12 letter for lawmakers to “close this loophole and protect the financial system.”

Crypto groups hit back several days later in their own letter to lawmakers, saying that preventing exchanges from offering rewards “would tilt the playing field in favor of legacy institutions, particularly larger banks, that routinely fail to deliver competitive returns and deprive consumers of meaningful choice.”

While senators have released several drafts of the market structure bill, changes to crypto exchanges offering rewards are still being worked out.

Sen. Cynthia Lummis, R-Wyo., who is working on the bill with Banking Chair Tim Scott, R-S.C., said she believes the issue is settled.

“The issue was heavily litigated in the GENIUS Act, and I am supportive of the compromise achieved by the banks and the digital asset industry,” she said in a statement to CNBC. “I do not think this issue should be reopened.”

RACINE, Wis. — Microsoft said Thursday that it will allocate $4 billion to build a second data center in Wisconsin. The first one will come online in early 2026, with the software company spending $3.3 billion on it.

The first Wisconsin data center, in nearby Mount Pleasant, will house hundreds of thousands of Nvidia Blackwell GB200 graphics processing units that are capable of handling artificial intelligence models, Brad Smith, Microsoft’s president and vice chair, said at a town hall meeting.

Cloud infrastructure providers are racing to build capacity to meet the needs of companies that want to run AI models. More than 700 million people use OpenAI’s ChatGPT, which draws on Microsoft’s Azure cloud, and software providers from Adobe to Salesforce have been adding AI feature enhancements to woo customers.

Microsoft plans to match the amount of energy it consumes from fossil fuel sources with carbon-free energy it will contribute to the grid, said Smith, who spent part of his childhood in Mount Pleasant.

“I just want you to know we are doing everything we can, and I believe we’re succeeding, in managing this issue well, so that you all don’t have to pay more for electricity because of our presence,” he said.

A solar farm that’s under construction 150 miles northwest of the data centers will contribute 250 megawatts of power. The two put together might require more than 900 megawatts, Smith said.

The initial data center is built on land where Foxconn originally planned to built a manufacturing plant. It will use as much 2.8 million gallons of water per year, while Foxconn was permitted to consume over 7 million per day, Smith said.

“It will deliver 10x the performance of the world’s fastest supercomputer today, enabling AI training and inference workloads at a level never before seen,” Microsoft CEO Satya Nadella wrote in an X post.

The second data center will be a similar scale as the first and will enter operation in 2027 or after that, Smith said.

“We did pause to think through exactly what we would build for phase two, how we would build it,” he said.

Wisconsin will be home to the largest number of GPUs under one roof, said the state’s Democratic governor, Tony Evers.

Earlier this week, Smith told reporters that the company has allocated $15.5 billion for additional infrastructure spending in the U.K. through 2028. Separately, Amsterdam’s Nebius Group said last week that Microsoft has agreed to spend up to $19.4 billion over five years to rent AI data center capacity.

WATCH: Azar: Data centers are a major driver

NBA superstar Kevin Durant can’t find the password to his Coinbase account, which holds bitcoin that he began buying in earnest when he was playing for the Golden State Warriors in 2016. His agent couldn’t be happier.

Durant’s predicament has “only benefited” the hoopster, agent Rich Kleiman said.

“We’ve yet to be able to track down his Coinbase account info, so we’ve never sold anything, and this bitcoin is just through the roof,” Kleiman said Tuesday at CNBC’s Game Plan conference in Los Angeles.
“It’s just a process we haven’t been able to figure out, but Bitcoin keeps going up … so, I mean, it’s only benefited us,” he said.

Durant, who will play for the Houston Rockets this upcoming season, began snapping up bitcoin around 2016, after the U.S. Olympic team legend and Kleiman attended a dinner where his then-teammates kept discussing the cryptocurrency.

“I just heard the word ‘bitcoin’ 25 times this evening, and the next day, we started investing in bitcoin,” Kleiman said. The agent did not say how much bitcoin Durant bought.

Bitcoin sold for between about $360 and $1,000 back in 2016, according to CoinGecko. The leading cryptocurrency is now trading at almost $116,000, or more than 11,000% above its highest price the year Durant was buying.

Durant has been unable to access his Coinbase account for “a few years” due to a “user error on our end,” Kleiman told CNBC on Wednesday.

“We’ve already been working directly with the Coinbase team on Kevin’s account recovery, which is why it was easy for me to make a joke about it on stage,” Kleiman said.

Kleiman said that he and Durant are also investors in Coinbase Global, and that the company “has been a valuable resource in growing our business.” In 2021, the duo’s Thirty Five Ventures struck a multi-year deal with Coinbase to promote the trading platform, which includes creating content about digital assets for Durant’s sports and entertainment website, Boardroom.

Coinbase, in a statement to CNBC, said its users can reset their passwords using self-service tools within the trading platform’s app. The platform for buying, selling and storing cryptocurrencies also has an around-the-clock support team fielding account recovery requests and other inquiries, according to a spokesman.