- Coinbase may withdraw support for the CLARITY Act if stablecoin rewards face restrictions on crypto platforms.
- Stablecoins generated $247M for Coinbase in Q4; banning rewards could hit revenue and platform activity hard.
- Banking groups warn stablecoin yields could siphon $6.6T from traditional banks, fueling DeFi vs. banking debate.
US crypto exchange Coinbase has escalated pressure on U.S. lawmakers over the CLARITY Act, warning it may withdraw support if the bill restricts stablecoin rewards. The exchange’s move reflects mounting tension between traditional banking interests and the fast-growing cryptocurrency sector.
According to Bloomberg, “Coinbase may reconsider its support” for the bill should it limit stablecoin issuers from offering rewards on crypto platforms. The Senate Banking Committee is scheduled to discuss the issue in a markup session this Thursday, making the debate increasingly urgent.
Coinbase has been clear in its strategy. Besides urging lawmakers to resist restrictions, the platform highlights the revenue potential of stablecoin rewards. In Q4 alone, stablecoins generated nearly $247 million for Coinbase, alongside $154.8 million from blockchain rewards. Circle’s USDC, for instance, allows users to earn around 3.5% yield, a figure that could drive significant platform activity.
Consequently, a ban on such rewards would materially impact Coinbase and other trading platforms. Moreover, Coinbase has applied for a national trust banking charter, which could legally enable it to continue offering rewards under certain rules.
DeFi Provisions Spark Wider Debate
However, banking groups argue that stablecoin rewards could siphon trillions from the traditional financial system. The Treasury Department estimated in April that widespread stablecoin adoption could draw $6.6 trillion from banks.
Furthermore, there was an anti-DeFi movement advertising on Fox News, urging the public to corner the senators in legislation related to the ban on DeFi provisions. The fight portrayed a larger conflict between the innovation of crypto and banking regulations.
Besides the financial stakes, political timing adds uncertainty. Analysts warn that the 2026 U.S. midterm elections could slow the CLARITY Act’s progress, possibly delaying passage until 2027 and final implementation until 2029.
Senate Banking Committee Chair Tim Scott, however, maintains optimism, stating the bill can “deliver real results for the American people.” Meanwhile, the crypto community has mobilized, with Stand With Crypto claiming over 135,000 emails sent to senators to protect stablecoin rewards.
Future of Crypto Rewards Hangs in Balance
Therefore, the result of this legislative policy debate is bound to influence the Coinbase business model as well as the DeFi space in its entirety. In addition to this, the policy is also potentially changing the landscape of stablecoin economic incentives as well as the rivalry between the two sectors (crypto services and the banks).
Investors in the industry and users wait with bated breath while deliberations ensue later this Thursday, recognizing that a potential path for all of American crypto policy may be set by the CLARITY Act.