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- Coinbase warns of reconsidering US crypto bill over reward limits.
- Disputes over stablecoin rewards could disrupt US crypto legislation.
- Coinbase lobbies intensify ahead of crucial crypto bill unveiling.
Coinbase Global has indicated that it may reconsider its support for the US crypto market structure bill if the proposed restrictions on stablecoin rewards exceed basic disclosure requirements. The exchange is also reported to be intensifying its lobbying efforts ahead of the bill’s impending release.
This has become one of the main areas of debate, with Coinbase viewing any further restrictions on rewarding platform-based policies as a direct implication for its business model. The company believes that by doing this, it will suppress competition in the industry.
In the existing Geniuse act structure, issuers of stablecoins cannot pay direct interest on the tokens they hold. Nonetheless, the legislation does not prevent third-party platforms, such as Coinbase, from providing bonuses based on user balance.
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Legislators are currently debating further restrictions on these rewards, and one suggestion is to limit them to controlled financial institutions only. This would affect Coinbase, which is applying to receive a charter of a national trust, and other crypto companies promoting the maintenance of platform-based rewards.
Coinbase generates revenue by collaborating with Circle and earning interest on its USDC reserves. The incentives provided by the exchange include 3.5 percent rewards on balances of Coinbase One. Revenue related to stablecoins is estimated to grow to $ 1.3 billion in 2025, and additional limitations may significantly decrease this source of revenue.
Stablecoin Rewards Become a Political Flashpoint
The controversy over stablecoin rewards has already sparked a conflict between cryptocurrency sites and conventional banks. According to the banking groups, such rewards are akin to unregulated yield-bearing products, which may shift deposits out of banks and harm community lending to small businesses, as well as homebuyers.
Cryptocurrency companies argue that the rewards on their platforms are not comparable to those of conventional banks and that customers understand the risks associated with digital assets. Coinbase Chief Policy Officer Faryar Shirzad has since opined that capping stablecoin yields might disadvantage US companies if other countries, such as China, introduce rewards on their digital currencies.
Legislative Pressure Tests Bipartisan Support
This rift is beginning to cause bipartisan backing on the larger market structure bill, with legislators fearing that it might obstruct the pace of the legislation. The stance of Coinbase might also serve as an obstacle in the negotiation process, as the company itself is a large-scale donor to President Donald Trump throughout and even after the election campaign.
The Trump administration has strongly supported the expeditious enactment of crypto laws in the wake of the GENIUS Act. The issue of stablecoin rewards may, however, postpone the anticipated time of the bill, and unless a compromise is made, the bill may fail to proceed as planned.
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