Coinbase has warned U.S. lawmakers that it may withdraw its support for the proposed CLARITY Act if the legislation places strict limits on stablecoin rewards, turning the issue into a potential flashpoint for Washington’s next major crypto bill.
According to a Jan. 11 report, the dispute has emerged just as Congress prepares to advance a sweeping digital asset market structure framework. Coinbase views stablecoin rewards not only as a core part of its business model but also as a key element of competition in the broader stablecoin ecosystem.
Stablecoin rewards become a key dividing line
At the center of the debate is Coinbase’s ability to offer rewards on stablecoin balances, particularly USD Coin. The exchange earns interest from the reserves backing USDC, issued by Circle, and shares part of that income with users.
Some Coinbase customers, including members of its premium Coinbase One program, currently earn rewards of around 3.5% on USDC holdings. These incentives encourage users to keep funds on the platform and provide Coinbase with a relatively stable revenue stream during periods of lower trading activity.
Analysts estimate that Coinbase’s stablecoin-related revenue reached approximately $1.3 billion in 2025. Any restriction on rewards could reduce user balances held on the exchange, putting that income at risk. Coinbase’s minority ownership stake in Circle further increases its exposure to the stablecoin market.
Several policy proposals under discussion would limit stablecoin rewards to regulated banks or traditional financial institutions. Banking industry groups have supported such measures, arguing that yield-bearing stablecoin accounts could divert deposits away from banks and reduce lending capacity across the economy.
GENIUS Act sets the regulatory backdrop
The current debate follows the passage of the GENIUS Act in July, which established the first federal framework for stablecoin issuers. While the law prohibits issuers themselves from paying interest simply for holding stablecoins, it does not prevent third-party platforms from offering rewards to users.
Crypto firms argue that this distinction was intentional. Coinbase executives say restricting platform-based rewards would undermine compromises already embedded in the GENIUS Act and tilt the competitive landscape in favor of traditional banks.
The exchange has also positioned stablecoin rewards as a way to strengthen the U.S. dollar’s role in global digital finance, especially as other countries experiment with interest-bearing digital currencies and central bank digital assets.
Political pressure builds around CLARITY Act
The crypto industry was among the largest corporate political spenders during the 2023–2024 election cycle, and Coinbase has been one of the most visible contributors. As a result, its threat to pull support carries significant weight as lawmakers seek to preserve momentum behind broader market structure reforms.
Some senators are now exploring compromise options, including allowing rewards only for firms that hold bank or trust charters. Several crypto companies have received conditional approvals for national trust bank status, though those approvals remain controversial and face resistance from banking groups.
For now, stablecoin rewards have emerged as one of the most contentious issues in the bill. Analysts warn that if bipartisan support fractures further, the CLARITY Act could face significant delays or fail to pass altogether this year.
