Stablecoin Rewards Ban Emerges as Flashpoint in US Crypto Regulation Debate
Coinbase is signaling that its support for the proposed CLARITY Act, a major U.S. crypto market structure bill, may be at risk as lawmakers debate provisions that could ban stablecoin rewards offered through exchanges. The dispute highlights growing tension between the crypto industry and traditional banking interests as Congress moves closer to key decisions.
According to sources familiar with the situation, Coinbase may reconsider backing the legislation if it restricts stablecoin issuers from offering rewards via crypto platforms. While existing law already bars issuers from directly paying interest to token holders, it leaves room for third-party platforms to provide rewards, a structure now under scrutiny.
Banking groups argue that allowing such rewards could pull trillions of dollars out of the traditional banking system, while crypto advocates see them as essential for innovation and consumer choice.
Stablecoins represent a major revenue stream for Coinbase, generating hundreds of millions of dollars quarterly through stablecoin-related income and blockchain rewards. A ban on rewards for widely used stablecoins could materially impact exchange revenues and user adoption.
The CLARITY Act is set for further discussion this week, though analysts warn that political headwinds and upcoming elections could delay passage and implementation for several years.The outcome of the stablecoin rewards debate could shape the future balance between crypto platforms and traditional banks, with Coinbase’s support for the CLARITY Act hanging in the balance.
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