Coinbase has signaled it may pull support from a key U.S. crypto bill if lawmakers add restrictions on stablecoin rewards.
The move highlights clashes as Congress works on digital asset rules.
The exchange’s position takes aim at the Digital Asset Market Clarity Act of 2025, which seeks to establish oversight for cryptocurrencies.
Coinbase supports the bill but does not support changes that hinder rewards programs.
Banks Challenge Rewards as Threat to Deposits
Traditional banks have pushed back on rewards tied to stablecoins.
The American Bankers Association argues such programs could siphon deposits from lenders and reduce funds for loans and credit.
Banks say rewards mimic interest payments, which the GENIUS Act banned for stablecoin issuers in July 2025.
They want Congress to extend the ban to platforms like exchanges.
Coinbase argues that rewards are not equivalent to bank interest.
It pays for them with revenue from the platform, not with lent reserves. “Stablecoin rewards ban would do nothing to improve consumer protection and only serve to drive legitimate projects offshore,” Coinbase chiefs have reportedly said.
Crypto Groups Rally Against Expanded Bans
More than 100 crypto firms have urged senators to reject broader limits.
A The letter from the Blockchain Association on December 18, 2025, referring to opposition against reward, views it as a move to preserve outdated revenue models rather than a matter of safety.
The letter points out that Congress has maintained third-party incentives in the GENIUS Act.
Cryptocurrency supporters fear that new restrictions could make US stablecoins inferior to their rivals abroad.
USDC stablecoins allow users to hold “digital dollars” of constant worth.
Rewards on these dollars pay 3.5% yields, which is significantly better than many bank accounts.
This increases their adoption and reduces payment fees, according to Coinbase.
Bill Faces Senate Markup Amid Disputes
The Clarity Act was approved in the House and is stuck in the Senate. According to a report in CoinDesk, the industry might just walk away with unmet needs, including stablecoin, among others.
Still in progress are discussions about rewards, decentralized finance, and the roles of agencies. Problems are being encountered in bipartisanship
But the warning from Coinbase is adding more pressure. This company has also lobbied vigorously with the argument that the reward will enhance the worldwide position of the dollar in the digital world of finance.
How Rewards Work and Why They Matter
Users get rewards in return for holding stablecoins on platforms. The sources of funds are reserves or fees, and no loans. Such model does not attract banking regulation, but it faces criticism from lenders.
Banks are afraid that trillions of dollars in outflows could result because of rewards being handed out. Evidence indicates little effect has been shown in domestic circles so far.
The competition challenges whether regulations work in favor of banks or new tech.
Incentives might increase stablecoin supplies to $500 billion through the end of the year, according to estimates.
Timeline of Key Events in Crypto Regulation
Congress enacted the GENIUS Act on July 18th, 2025, making banning issuer yields illegal.
Banks wrote letters in December 2025, encouraging further bans on the issue.
The Senate Banking committee has planned a markup for January 15, 2026, which will determine the bill’s outcome.
Legislators have an objective of passing the acts prior to the midterm elections in 2026. Failure to pass the acts
It could influence U.S. policy guidelines. Strict regulations would lead to slow growth, whereas flexibility would promote its adoption.
For example, crypto-exchange companies such as Coinbase emphasize that rewards increase accessibility and convenience. In contrast, banks focus on “stability and fair play.”
With talks drawing to a close, it’s uncertain whether the bill will pass through Congress.
It might provide clarity on regulations, but opposition builds regarding possible cuts in rewards.
