The Bloomberg report follows speculation that Senate lawmakers are exploring tighter rules on yield for dollar-backed tokens.
- According to a Bloomberg report, Coinbase may withdraw support for the CLARITY bill if it restricts stablecoin rewards.
- For Coinbase, stablecoin rewards represent a key source of revenue.
- It also owns a minority stake in USDC issuer Circle.
Coinbase (COIN) is reportedly prepared to revoke its support for the CLARITY Act ahead of its unveiling on Monday in a bid to preserve its ability to offer rewards to customers who hold stablecoins.
People familiar with the matter told Bloomberg that Coinbase is reconsidering its backing of the digital-asset market-structure proposal if the final text extends beyond enhanced disclosure requirements related to rewards. The bill is scheduled for markup in at least one Senate committee this week.
COIN’s stock traded flat in after-hours trade on Sunday night after a dip of 1.96% on Friday. Retail sentiment around the largest crypto exchange in the U.S. fell to ‘neutral’ from ‘bullish’ territory over the past day, but chatter remained at ‘high’ levels.
To Yield Or Not To Yield?
According to the report, Coinbase’s position hinges on whether the market structure bill includes provisions that materially limit how rewards can be offered on stablecoins. For the exchange, platform-based incentives are a legitimate feature of crypto markets and should not be treated the same as traditional bank deposits.
The report follows speculation that the Senate Banking Committee has been in talks with crypto executives and policy advocates about tightening rules around stablecoin yield. Proposals under discussion include limiting rewards to transaction-based activity or requiring issuers to obtain an Office of the Comptroller of the Currency (OCC) bank charter before offering yield, something that Coinbase has already applied for.
This would restrict the ability of companies like Coinbase to offer rewards to regulated financial institutions, according to industry insiders cited by Bloomberg. The report said the approach has found support among some banking groups, which argue that yield-bearing stablecoin accounts could divert deposits away from traditional banks.
Last week, Galaxy Digital (GLXY) CEO Mike Novogratz also argued that rolling back elements of the GENIUS Act, like stablecoin yields, would weaken U.S. innovation and competitiveness.
Novogratz was responding to remarks from Coinbase Chief Policy Officer Faryar Shirzad, who cautioned that reopening the debate on stablecoin yields would inject uncertainty into crypto policy, especially as stablecoin adoption is ramping up globally.
Why Do Stablecoin Rewards Matter For Coinbase?
For Coinbase, stablecoin rewards represent a key source of revenue. The exchange shares in interest income generated from the reserves backing Circle Internet Group’s (CRLC) USDC stablecoin (USDC), which is held largely in cash and short-term U.S. Treasurys. USDC balances held on Coinbase provide a relatively stable income stream, particularly during periods of lower trading activity. Coinbase also owns a minority stake in Circle.
CRCL’s stock edged 0.24% higher in after-hours trade on Sunday night after a gain of 1.36% on Friday. Retail sentiment around the company remained in ‘bearish’ territory over the past day, even as chatter was at ‘high’ levels. Retail sentiment around its stablecoin, USDC, was also in ‘bearish’ territory over the past day, accompanied by ‘high’ levels of chatter.
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