Coinbase May Withdraw Support for US Market Structure Bill Over Stablecoin Rewards

Coinbase Global may reconsider its support for the US crypto market structure bill if it imposes broader limits on stablecoin rewards. The company views any additional restrictions as a threat to its business model. The bill is set to be unveiled on January 12 and will be marked up in two Senate committees.

The GENIUS Act, passed in July 2025, prohibits stablecoin issuers from paying direct interest or yield to users. However, it does not prevent third-party platforms like Coinbase from offering rewards. The proposed market structure bill may limit such rewards to regulated financial institutions. Coinbase has applied for a national trust charter, which could allow it to offer such rewards under those rules.

Banks argue that stablecoin rewards threaten to divert deposits away from traditional institutions. The American Bankers Association has expressed concerns about the potential impact on community lending. They argue that crypto platforms cannot offer FDIC-insured products and are not designed to fill the lending gap.

Coinbase's lobbying efforts have intensified as the bill moves forward. The company has donated significant sums to political campaigns, including $1 million to Donald Trump's inauguration. This financial support gives Coinbase considerable influence in shaping the bill's outcome.

A potential compromise would allow only entities with banking licenses to offer rewards on stablecoin balances. This middle ground could appease both the crypto industry and the banking sector. However, some crypto firms argue that broader restrictions would stifle competition and innovation.

Coinbase's stablecoin-related revenue is projected to reach $1.3 billion in 2025. Any restrictions on stablecoin rewards could significantly impact this revenue stream. The company offers incentives such as 3.5% rewards on Coinbase One balances to encourage users to hold stablecoins. If the bill bans such incentives, fewer users may choose to hold stablecoins on Coinbase.

Why Did This Happen?

The proposed market structure bill aims to clarify oversight between agencies like the SEC and CFTC. However, the inclusion of stablecoin reward restrictions has sparked debate. The Trump administration supports the swift passage of the bill but faces challenges due to the stablecoin rewards issue.

Coinbase's position reflects its business model, which relies heavily on stablecoin rewards. The company partners with Circle to share interest income from USDC reserves. This partnership provides a steady revenue stream, especially during bear markets. Coinbase also owns a small stake in Circle, which is the largest stablecoin issuer in compliance with US law.

What Are Analysts Watching Next?

Analysts are closely monitoring how the bill will be structured. The exact wording of the bill will determine its impact on the crypto industry. Nathan Dean of Bloomberg Intelligence estimates that the odds of the bill passing in the first half of 2026 are less than 70%.

The banking industry remains a strong opponent of stablecoin rewards. They argue that such rewards pose systemic risks and undermine traditional financial systems. The American Bankers Association has expressed concerns about the potential impact on small businesses, farmers, students, and home buyers.

Crypto firms counter that the restrictions would hinder innovation. Faryar Shirzad, chief policy officer at Coinbase, argues that preserving stablecoin rewards is essential for maintaining the dollar's supremacy. He points to China's plans to pay interest on its digital yuan as a reason to maintain competitive advantages.

What's the Path Forward?

The final bill will need to balance the interests of the crypto industry and the banking sector. A compromise that allows only regulated institutions to offer rewards could satisfy both sides. However, this approach may not fully address the concerns of either group.

The outcome of the bill will have significant implications for the crypto market. If restrictions are imposed, crypto companies may seek new ways to reward users. William Gaybrick of Stripe suggests that platforms will find alternative methods to reward users within applications.

The political and regulatory landscape will continue to evolve as the bill moves through Congress. The Trump administration's support for crypto legislation could influence the bill's final form. However, the debate over stablecoin rewards remains a critical issue that could delay or prevent the bill's passage.