Coinbase CEO Pushes for Stablecoin Rewards as Senate Delays Crypto Bill

Coinbase CEO Brian Armstrong has stepped up lobbying efforts to protect stablecoin reward programs, arguing that restrictions in a proposed Senate bill could harm the crypto market's competitive edge against traditional banks according to reports. The bill, drafted by the Senate Banking Committee, has drawn sharp opposition from Coinbase and other crypto firms, who warn it could effectively ban these rewards as reported.

The delay in the bill's markup allows for more bipartisan negotiations, after Armstrong criticized the draft as flawed and potentially harmful to innovation according to analysis. Lawmakers cited the need for broader support, especially after Coinbase and other industry players expressed concerns over regulatory clarity and market structure as noted.

Stablecoin rewards are a core revenue driver for Coinbase, with the company generating nearly $247 million from stablecoin-related activities in the most recent quarter according to data. Armstrong has argued that these programs are distinct from bank interest and should not be regulated under the same framework as stated.

Why Did This Happen?

Coinbase has warned that the proposed bill could eliminate reward mechanisms for stablecoin holders, favoring traditional banks over crypto platforms according to reports. Armstrong has stated that Coinbase will not back legislation that undercuts a core part of its business model as clarified.

The company's stance has drawn support from crypto advocates who argue that stablecoin rewards should be allowed as long as risks are properly disclosed according to analysis. Proponents argue that the programs encourage user engagement and innovation in the crypto space as reported.

How Did Markets React?

Coinbase's stock has seen mixed analyst reactions in recent weeks. Wall Street analysts forecast a rise in COIN stock price over the next 12 months, with an average 1-year price target of $400.63 according to forecasts. Some analysts, including those at Barclays, have lowered their price targets due to concerns over declining trading volumes and USDC growth as noted.

The company has received upgrades from some analysts, including BofA, which upgraded Coinbase to Buy from Neutral with an unchanged price target of $340 according to reports. Analysts have noted that despite the recent stock decline, the company's product velocity has increased and its addressable market has expanded as observed.

What Are Analysts Watching Next?

Analysts are closely watching the outcome of the Senate Banking Committee's negotiations. The delay in the bill's markup introduces uncertainty into the regulatory landscape, with some predicting the bill may not pass until 2027 or later according to projections.

Coinbase's application for a national trust banking charter could help the company operate within existing legal frameworks, but a stricter bill could override this strategy as noted. This could affect Coinbase's ability to offer reward programs and maintain user engagement according to analysis.

The broader crypto industry is also observing how the bill will affect competition between crypto firms and traditional banks. Some lawmakers argue that stablecoin rewards could lead to large-scale deposit migrations from banks to crypto platforms, potentially undermining financial stability as reported.

The Senate Banking Committee has emphasized the importance of clear regulatory boundaries for the crypto market, with the goal of protecting consumers and ensuring the future of finance is built in the U.S. according to analysis. However, the bill must strike a balance between regulation and innovation to avoid stifling the industry's growth as noted.