- Coinbase may withdraw support for the CLARITY Act if the bill limits rewards on stablecoins.
- Stablecoin rewards provide a key revenue stream for Coinbase, tied to interest on reserves backing USDC.
- Senate discussions include proposals to limit yield to transaction-based activity or require an OCC charter before offering rewards.
- Industry figures warn that curbing stablecoin yields could hurt U.S. crypto innovation and competitiveness.
- Coinbase holds a minority stake in the issuer of USDC, amplifying the company’s interest in reward rules.
Coinbase is prepared to withdraw support for the CLARITY Act ahead of a scheduled markup this week if the bill restricts how it offers rewards on stablecoins, according to people familiar with the matter. The company says platform incentives are a legitimate market feature and should not be treated like traditional bank deposits.
Senate discussions reportedly include options to limit rewards to transaction-based activity or to require issuers to hold an Office of the Comptroller of the Currency charter before offering yield, a charter Coinbase has already applied for. Support for tighter rules has surfaced among some banking groups, which argue yield-bearing stablecoin accounts could pull deposits from traditional banks.
For Coinbase, stablecoin rewards matter because the exchange shares interest income from reserves backing USDC, which are held largely in cash and short-term U.S. Treasurys. Balances of USDC on the platform provide a steady income stream, especially during slower trading periods, and Coinbase owns a minority stake in the stablecoin issuer.
Market moves were muted: COIN traded flat in after-hours trade Sunday after a 1.96% drop on Friday. Retail sentiment around the exchange fell to “neutral” from “bullish,” while chatter stayed at high levels. Circle Internet Group’s stock edged 0.24% higher in after-hours trading after a 1.36% gain on Friday, with sentiment around USDC described as bearish and chatter high.
Industry voices have weighed in publicly. Mike Novogratz, CEO of Galaxy Digital, argued that rolling back elements of the GENIUS Act, such as stablecoin yields, would weaken U.S. innovation and competitiveness, responding to remarks by Faryar Shirzad, Coinbase’s chief policy officer, who cautioned that reopening the debate would inject policy uncertainty.
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