A fight over stablecoin rewards is threatening to fracture Coinbase’s support for Washington’s next major crypto bill.
Summary
- Coinbase may oppose a key crypto bill if stablecoin rewards are restricted.
- Rewards tied to USDC are a major revenue source for the exchange.
- The dispute risks delaying market structure legislation in Congress.
Coinbase is drawing a clear line as Congress moves closer to finalizing its next major crypto bill dubbed the CLARITY Act.
The warning surfaced on Jan. 11 in a report by Bloomberg, as lawmakers prepare to mark up a sweeping digital-asset market structure bill in the Senate later this week.
Stablecoin rewards become a fault line
Coinbase has told U.S. lawmakers it may withdraw support for the CLARITY Act if it restricts stablecoin rewards beyond basic disclosure rules. The exchange views the issue as central to its business and to competition in the stablecoin market, according to people familiar with the company’s thinking.
At stake is Coinbase’s ability to offer rewards on stablecoin balances, particularly USD Coin (USDC). The exchange shares interest income generated from reserves backing Circle’s USDC and uses part of that income to offer incentives to users, including roughly 3.5% rewards for some Coinbase One customers.
Those incentives encourage users to keep stablecoins on the platform and provide a steady revenue stream, especially during weaker trading cycles. Bloomberg estimates Coinbase’s stablecoin-related revenue may have reached about $1.3 billion in 2025.
If rewards are curtailed, fewer users may hold USDC on the exchange, putting that income at risk. Coinbase also owns a minority stake in Circle, deepening its exposure to the stablecoin economy.
Some proposals circulating in Washington would limit stablecoin rewards to regulated banks or financial institutions. The banking lobby has backed that approach, arguing that yield-bearing stablecoin accounts could pull deposits out of the traditional banking system and reduce lending to households and small businesses.
GENIUS Act sets the backdrop
The debate follows the passage of the GENIUS Act in July, which created the first federal framework for stablecoin issuers. That law bars issuers from paying interest or yield tied solely to holding stablecoins, but it does not block third-party platforms from offering rewards to users.
Crypto firms say that distinction was deliberate. Coinbase executives argue that banning platform-based rewards would undo compromises already settled in the GENIUS Act and tilt the field in favor of banks.
The company has also framed rewards as a way to strengthen the dollar’s role in global digital finance, especially as other countries explore interest-bearing digital currencies.
Political pressure around the bill is rising. The crypto industry was one of the largest corporate political spenders during the 2023–2024 election cycle, and Coinbase has been a visible donor. Its threat to pull support carries weight as lawmakers try to maintain momentum behind broader market structure reforms.
Still, the final outcome remains uncertain. Some senators are considering a middle ground that would allow rewards only for firms holding bank or trust charters. Several crypto companies have already received conditional approvals for national trust bank status, though those approvals face opposition from banking groups.
For now, stablecoin rewards have become a flashpoint that could slow or derail the legislation altogether. Analysts warn that if bipartisan support erodes further, the odds of passing the bill this year could drop sharply.
