TLDR:
- Coinbase may withdraw support if bill restricts stablecoin rewards beyond disclosure requirements
- Banking industry opposes rewards claiming they drain deposits and threaten community lending power
- Stablecoin revenue reached $1.3 billion for Coinbase in 2025, making rewards business-critical
- Bipartisan support erodes as Senate markup approaches Thursday with passage odds below 70 percent
Coinbase threatens to pull support from a major US digital asset market-structure bill if lawmakers include restrictions beyond enhanced disclosure requirements on stablecoin rewards.
The largest US crypto exchange considers the rewards program essential to its business model. The bill is scheduled for Senate committee markup on Thursday, creating immediate pressure on legislators to resolve the dispute.
Banking Industry Opposition Drives Regulatory Tension
The controversy centers on provisions in the upcoming market-structure bill that could limit platform-based stablecoin rewards. According to a Bloomberg report published January 11, 2026, Coinbase may reconsider backing the legislation if restrictions exceed disclosure requirements.
The existing GENIUS Act already prohibits stablecoin issuers like Circle from paying interest directly to token holders.
However, third-party platforms such as Coinbase can currently offer rewards based on customer balances.
The banking sector has mounted fierce opposition to these rewards programs. The American Bankers Association argues that yield-bearing stablecoin accounts could drain deposits from traditional banks.
The trade group stated that displaced community bank lending would harm vulnerable groups. “If billions are displaced from community bank lending, small businesses, farmers, students, and home buyers in towns like ours will suffer,” the association wrote in a recent letter.
Banks also note that crypto platforms cannot offer FDIC-insured products despite aggressive advertising campaigns.
One option under consideration would restrict rewards to regulated financial institutions only. This approach has gained traction among banking advocates who view stablecoin rewards as unfair competition.
Coinbase has applied for a national trust charter that could eventually permit rewards under such rules. Yet crypto-native firms oppose this path, arguing it would eliminate platform-based rewards as a viable business model.
The dispute has eroded bipartisan support for the broader market-structure bill. Bloomberg Intelligence analyst Nathan Dean estimates markup lacking bipartisan backing could push passage odds below 70% for the first half of 2026.
The Trump administration wants swift legislative action, but senators face difficult choices on an issue with little room for compromise.
Revenue Stakes and Political Influence Shape Debate
Stablecoin rewards represent significant revenue for Coinbase. The exchange shares interest income from reserves backing Circle’s USDC stablecoin.
Coinbase currently offers 3.5% rewards on Coinbase One balances to encourage USDC holdings. Bloomberg data projects Coinbase’s total stablecoin revenue reached $1.3 billion in 2025.
Restrictions could reduce these earnings, particularly during bear markets when trading volumes decline.
Coinbase Chief Policy Officer Faryar Shirzad has defended rewards as crucial for US dollar dominance. Shirzad emphasized preserving rewards means lower costs and more choice for Americans.
Shirzad also highlighted that China recently announced plans to pay interest on its digital yuan. This competitive dynamic adds urgency to the policy debate as global digital currency competition intensifies.
The cryptocurrency industry wielded substantial political influence during the 2023-2024 election cycle as the largest corporate spender.
Coinbase CEO Brian Armstrong donated $1 million to Donald Trump’s presidential inauguration. The company also contributes to financing the president’s proposed White House ballroom.
This political capital strengthens Coinbase’s negotiating position with lawmakers as the bill moves through committee review.
Industry observers expect crypto firms will find workarounds if restrictions pass. Stripe President William Gaybrick offered perspective on potential industry responses. “There’s no world in which we won’t be able to reward consumers for taking actions within applications,” Gaybrick said in an interview last year.
Five crypto firms recently received conditional approvals for national trust bank charters from the Office of the Comptroller of the Currency. These approvals offer a potential compromise path, though banking groups opposed them vigorously.
