Stablecoin Rewards Face Legislative Opposition as BTC Traders Await US CPI Data

The U.S. Senate Banking Committee has released a revised version of the crypto market structure bill that bars digital asset service providers from offering interest or yield on payment stablecoins. This update follows months of lobbying from traditional banks, which argue such incentives could undermine the stability of the traditional banking system. The provision is included in Section 404 of the bill, titled 'Preserving Rewards for Stablecoin Holders,' and explicitly prohibits providers from offering interest or yield for simply holding payment stablecoins according to the bill's text.

The American Bankers Association has warned that if crypto companies continue to offer yield on stablecoin holdings, it could divert $6.6 trillion in deposits away from traditional banks, potentially threatening local lending and economic stability as reported.

The draft bill also includes carve-outs for activity-based rewards, which means incentives tied to transactions, payments, and other actions remain permissible. This distinction is crucial for crypto platforms like Coinbase, which rely heavily on such programs for revenue.

Why Did This Happen?

The debate over stablecoin rewards has been ongoing since the passage of the GENIUS Act, which restricted stablecoin issuers from paying interest but left open questions about affiliated exchanges offering rewards. Banks have long argued this creates a loophole, allowing crypto firms to circumvent regulations.

Coinbase and other digital asset companies have pushed back against the restrictions, warning that they could hurt innovation and user engagement. The company reported generating nearly $247 million from stablecoin-related activities in the most recent quarter.

The Senate Banking Committee's latest draft aligns with a broader trend of regulatory tightening in the crypto space. Dubai's financial regulator, for example, has also introduced tighter rules, banning privacy tokens and imposing stricter definitions for fiat-backed stablecoins.

How Did Markets React?

Bitcoin and other major cryptocurrencies remain relatively stable as investors await the U.S. Consumer Price Index (CPI) data, expected to be released today. The CPI report is seen as a key factor influencing short-term price action across cryptocurrencies and other risk assets.

Bitcoin has been trading between $91,200 and $91,400, with analysts forecasting that a dovish CPI result could push the price toward $92,800–$93,200, while a hawkish surprise might send it down below $90,000 according to market analysis.

The crypto market is also closely watching the outcome of the Senate Banking Committee's markup process. The bill's final form will determine whether stablecoin rewards remain a viable part of the industry's business model. Coinbase has signaled it may withdraw support if the bill restricts stablecoin rewards beyond existing transparency and disclosure rules.

What Are Analysts Watching Next?

Analysts are closely monitoring the legislative timeline for the bill and the broader economic indicators that may influence market sentiment. The 2026 midterm elections may slow down the bill's progress, with some analysts predicting it could not pass until 2027.

The release of the CPI data is expected to have a significant impact on crypto markets. If the data aligns with market expectations of 2.7% year-on-year for both headline and core inflation, it could provide some clarity on the Federal Reserve's policy path according to analysts.

Investors are also watching for further developments in the regulatory landscape, including how the bill will affect the business models of major crypto platforms and whether it will lead to increased market consolidation. Coinbase's political influence and lobbying efforts make it a key player in determining the bill's final form.

The outcome of the legislative process will have far-reaching implications for the U.S. crypto market. If stablecoin rewards are significantly restricted, it could impact user behavior and potentially drive users toward offshore platforms with more favorable regulatory environments as observed.

Market participants are also looking for clarity on the regulatory boundaries between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The current draft of the bill leaves these responsibilities largely to the CFTC, a key concern for many in the industry according to industry analysis.

With both the Senate Banking Committee and Agriculture Committee set to mark up sections of the Digital Asset Market Clarity Act this week, the coming days will be crucial for the future of stablecoin rewards and the broader crypto regulatory framework as reported.