{"id":5501,"date":"2026-01-12T08:57:40","date_gmt":"2026-01-12T08:57:40","guid":{"rendered":"https:\/\/cryptonews.uk.com\/?p=5501"},"modified":"2026-01-12T08:57:40","modified_gmt":"2026-01-12T08:57:40","slug":"stablecoin-reward-limits-could-upend-crypto-bill","status":"publish","type":"post","link":"https:\/\/cryptonews.uk.com\/?p=5501","title":{"rendered":"Stablecoin Reward Limits Could Upend Crypto Bill"},"content":{"rendered":"

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  • Coinbase is reportedly lobbying US lawmakers to reject any move to amend the crypto market structure bill to restrict its ability to pay rewards to stablecoin holders on its platform.<\/span><\/li>\n
  • Coinbase relies on revenue generated from interest on the reserves backing stablecoins like USDC as a significant source of income, making as much as US$1.3 billion from it in 2025.<\/span><\/li>\n
  • The US banking industry is seeking a ban on any yield payments to holders of stablecoins, arguing it represents a threat to the US banking system and will weaken community lending.<\/span><\/li>\n<\/ul>\n<\/div>\n<\/div>\n

    Cryptocurrency exchange, Coinbase, is ramping up pressure on US lawmakers to reject any wording in the forthcoming crypto market structure bill that would limit its ability to pay rewards to users holding stablecoins, according to a report from Bloomberg.<\/p>\n

    Citing an anonymous source with knowledge of Coinbase\u2019s position on the matter, Bloomberg claimed the exchange may remove its support for the market structure bill \u2014 commonly known as the CLARITY Act \u2014 should the legislation restrict its ability to pay rewards to stablecoin holders.\u00a0<\/p>\n

    As yet, Coinbase has not replied to these claims.<\/p>\n

    Stablecoin rewards are an important money-spinner for Coinbase, particularly during crypto bear markets. Coinbase has a small ownership stake in Circle \u2014 the company behind the USDC stablecoin \u2014 and it shares in the interest income generated by the reserves backing USDC.\u00a0<\/p>\n

    Currently, Coinbase incentivises its users to hold USDC on its platform by offering rewards. If it were to be banned from offering these rewards, it\u2019s likely fewer customers would hold USDC on Coinbase and its stablecoin revenue \u2014 estimated to have topped US$1.3 billion (AU$1.9b) in 2025 \u2014 could potentially collapse.<\/p>\n

    Lawmakers are believed to be considering an option that would see Coinbase and other crypto exchanges restricted from offering rewards to any regulated financial institution, while allowing regular customers to continue receiving rewards. This position is popular among the banking industry as it fears the growth of yield-bearing stablecoins could see a huge migration of capital from bank deposits to crypto exchanges like Coinbase.<\/p>\n

    Doubts have previously been raised over whether the bill will be finalised before 2027, due to stalling related to the US mid-term elections in late 2026, which may also result in a less crypto-friendly piece of legislation.<\/p>\n

    Related:<\/strong> TD Cowen Warns Midterms Could Stall Crypto Market Structure Push<\/p>\n

    If Coinbase were to remove its support for the bill and that, in turn, amplified a collapse of bipartisan support in Congress, the odds of the bill passing in the first half of 2026 could drop below 70%, according to Bloomberg Intelligence Analyst Nathan Dean.\u00a0<\/p>\n

    Banking Group Warns of Dangers of Stablecoin Rewards<\/h2>\n

    Last year\u2019s passage of the GENIUS Act provided a regulatory framework for stablecoins, mandating strict reserve requirements, monthly audits, anti-money laundering compliance and defining what kind of entities can issue stablecoins. Importantly though, while the GENIUS Act restricted stablecoin issuers from paying holders any kind of yield, it allowed third-party distributors, such as Coinbase, to continue.<\/p>\n

    This yield loophole is becoming a thorny issue, particularly for banks, who fear it could see a significant percentage of bank deposits flow to platforms like Coinbase, where customers can earn a higher yield through stablecoins.<\/p>\n

    Related:<\/strong> Zodia Custody Unlocks Institutional Access to Australia\u2019s First Regulated Stablecoin<\/p>\n

    In a letter sent to many US Senators on January 5, the American Bankers Association (ABA) hit out at yield-bearing stablecoins, suggesting they could trigger a weakening of the banking sector and a decline in community lending.<\/p>\n

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    The GENIUS Act, while not perfect from a community bank perspective, was a reasonable attempt to bring the stablecoin market into the regulatory light.<\/em><\/p>\n<\/div>\n

    \n American Bankers Association (ABA) <\/div>\n<\/div>\n

    The letter said that \u201camong its most important provisions, a ban on interest payments was put in place to ensure this new payments market can develop and mature without becoming a competitor to bank deposits.\u201d<\/p>\n

    The ABA highlighted that stablecoin issuers are currently exploiting a \u201cperceived loophole\u201d in the GENIUS Act\u2019s prohibition on interest payments by indirectly funding rewards payments through crypto exchanges such as Coinbase.<\/p>\n

    \u201cIf billions are displaced from community bank lending, small businesses, farmers, students, and home buyers in towns like ours will suffer,\u201d the ABA argued.\u00a0<\/p>\n

    \u201cCrypto exchanges and the constellation of stablecoin-affiliated companies are not designed to fill the lending gap, nor will they be able to offer FDIC-insured products, a point they omit from their aggressive advertising.\u201d<\/em><\/p>\n

    The ABA called on lawmakers to \u201cstand up for community banks and small businesses,\u201d by amending the forthcoming market structure bill to clarify that \u201cprohibition on interest applies to affiliates and partners of stablecoin issuers.\u201d Failure to do this, according to the ABA, will \u201cput economic growth and local communities at risk.\u201d<\/p>\n<\/p><\/div>\n

    Coinbase,Law,Stablecoins#Stablecoin #Reward #Limits #Upend #Crypto #Bill1768208260<\/p>\n","protected":false},"excerpt":{"rendered":"

    Coinbase is reportedly lobbying US lawmakers to reject any move to amend the crypto market structure bill to restrict its ability to pay rewards to stablecoin holders on its platform. Coinbase relies on revenue generated from interest on the reserves backing stablecoins like USDC as a significant source of income, making as much as US$1.3<\/p>\n","protected":false},"author":1,"featured_media":5502,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[749,62,1111,1110,166,1112],"class_list":{"0":"post-5501","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-bitcoin","8":"tag-bill","9":"tag-crypto","10":"tag-limits","11":"tag-reward","12":"tag-stablecoin","13":"tag-upend"},"yoast_head":"\nStablecoin Reward Limits Could Upend Crypto Bill - Crypto News: Latest Cryptocurrency News and Analysis<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cryptonews.uk.com\/?p=5501\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Stablecoin Reward Limits Could Upend Crypto Bill\" \/>\n<meta property=\"og:description\" content=\"Coinbase is reportedly lobbying US lawmakers to reject any move to amend the crypto market structure bill to restrict its ability to pay rewards to stablecoin holders on its platform. 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