- Stablecoin reward limits could wipe out a major share of Coinbase revenue
- Banking pressure intensifies as crypto incentives threaten traditional deposit models
- Political divisions grow as stablecoin rewards test U.S. crypto legislation
Growing friction is shaping the debate around U.S. crypto regulation as Coinbase Global signals resistance and prepares to reconsider support for a market structure bill if stablecoin rewards face new limits. Behind the scenes, policy discussions have intensified ahead of the bill’s release, as Coinbase views the reward issue as fundamental to its business sustainability.
Stablecoin incentives have become a major source of income for large crypto platforms, and any disruption would force significant changes across the sector.
Stablecoin Rewards Sit at the Center of the Dispute
The GENIUS Act already restricts stablecoin issuers from paying direct interest, but it allows third-party platforms to reward users based on balances. Coinbase argues this structure preserves competition and innovation, while narrowing it would alter digital asset economics. Lawmakers are weighing language that would limit rewards to regulated financial institutions, according to Bloomberg. That proposal has triggered strong pushback from crypto firms.
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Coinbase has applied for a national trust charter to meet regulatory expectations. Still, executives insist innovation should not depend on banking status. The exchange works closely with Circle, which issues USDC, and it earns shared interest income from reserve assets. Rewards of about 3.5% remain available on select Coinbase One balances.
Stablecoin-related revenue could reach $1.3 bn in 2025, but any reduction in rewards would significantly weaken that projection and pose a direct threat to earnings.
Banking Lobby Pushes Back Against Crypto Incentives
Traditional banking groups have urged lawmakers to impose stricter controls, arguing that reward-style incentives could draw deposits away from banks. They warn that reduced deposits may weaken lending for small businesses and homebuyers while stressing that crypto platforms lack FDIC-style protections.
Coinbase rejects that comparison and highlights global competition, with company leaders saying restrictive rules could disadvantage U.S. firms. Chief Policy Officer Faryar Shirzad has pointed to China’s digital yuan as a competing system, arguing that foreign rivals already use incentive-based models.
Political Stakes Rise as Bill Faces Uncertainty
The disagreement now strains bipartisan support for the broader legislation, which seeks to clarify oversight between the SEC and the CFTC. According to Bloomberg, lawmakers fear the reward dispute could delay progress, as negotiators increasingly view the issue as decisive. Coinbase’s position carries political weight beyond regulation, since the company ranks among the largest donors to President Donald Trump.
The Trump administration has pushed for fast passage of crypto legislation, but resistance from major industry players complicates that effort. As talks continue, Coinbase remains firm on protecting stablecoin rewards, and the outcome may shape the future profitability of U.S. crypto platforms.
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