Key Notes
- Coinbase said that it might reconsider its support for the Crypto Bill if the US lawmakers decided to act against stablecoin rewards.
- Some US policymakers are considering allowing stablecoin rewards only at regulated financial institutions, but not crypto-native firms.
- On the other hand, Coinbase has already applied for a national banking charter and earns significant income from USDC-based rewards, offering around 3.5% to users.
Just ahead of the Jan. 15 deadline for the much-awaited crypto bill of the CLARITY Act, crypto exchange Coinbase is stepping up efforts to provide rewards on stablecoin holdings. CEO Brian Armstrong has previously shared concerns over the proposed restrictions in the Crypto bill by the US lawmakers. The exchange stated that this feature is very critical to its own business model.
Coinbase Raises Concerns over Crypto Bill Restrictions
As reported by the Bloomberg publication, Coinbase remains concerned that restrictions that are currently under discussion would be part of the crypto market-structure bill.
The company has noted that it might reconsider its support for the Crypto bill if the legislation goes beyond the disclosure requirements and brings more limitations on stablecoin rewards.
Some US lawmakers are considering a proposal to restrict the stablecoin rewards to regulated financial institutions. Moreover, some banks and financial players argued that such a reward mechanism could possibly draw deposits away from traditional lenders. In a recent letter, the American Bankers Association wrote:
โIf billions are displaced from community bank lending, small businesses, farmers, students, and home buyers in towns like ours will suffer. Crypto exchanges and the constellation of stablecoin-affiliated companies are not designed to fill the lending gap, not will they be able to offer FDIC-insured products, a point they omit from their aggressive advertising.โ
However, crypto-native firms are pushing back, warning that limiting rewards to chartered institutions would undermine competition.
Coinbase has filed for a national trust charter, which could allow it to provide rewards under regulatory norms. Other market players like Trumpโs World Liberty Financial have also made similar moves.
The Importance of Stablecoins for Coinbase
Stablecoin rewards represent a meaningful revenue stream for Coinbase. The exchange shares interest income with Circle Internet Group from reserves backing Circleโs USDC
USDC
$1.00
24h volatility:
0.1%
Market cap:
$74.57 B
Vol. 24h:
$8.17 B
stablecoin. Besides, USDC balances held on Coinbase generate steady income.
To encourage adoption, Coinbase offers rewards of around 3.5% on USDC balances for certain customers. According to Bloomberg estimates, Coinbaseโs stablecoin-related revenue surged to $1.3 billion in 2025. If the forthcoming bill restricts or bans such incentives, fewer users may hold stablecoins on the platform, which can impact the exchangeโs revenue.
The final impact will depend on the exact wording of the bill. However, people familiar with the discussions say lawmakers are likely to include specific rules on stablecoin rewards. It has been the key issue of discussion between regulators and the crypto industry.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
