Coinbase May Rethink Backing Crypto Bill Over Stablecoin Rewards

Coinbase Global Inc. is escalating pressure on U.S. lawmakers to preserve its ability to offer rewards to customers who hold stablecoins. The largest U.S. crypto exchange may reconsider its support for the digital-asset market-structure bill if it includes restrictions beyond enhanced disclosure requirements according to Bloomberg.

The issue has become a deal-breaker for Coinbase, which earns a share of interest from reserves backing Circle’s USDC stablecoin. The company offers 3.5% rewards on Coinbase One balances to encourage users to keep stablecoins on its platform.

Coinbase’s stance is part of a broader industry debate over whether crypto platforms should be allowed to offer stablecoin rewards. Some proposals in Congress would limit these rewards to regulated financial institutions, a move backed by the banking sector.

Why Did This Happen?

The GENIUS Act, passed in July 2025, prohibited stablecoin issuers from paying interest directly to users but allowed third-party platforms like Coinbase to offer rewards. This distinction has now become a point of contention, with banks arguing that stablecoin rewards could siphon deposits from traditional financial institutions.

Coinbase and other crypto firms argue that limiting rewards to chartered institutions would stifle competition and innovation. They emphasize that stablecoin rewards are a core feature for users and provide a steady revenue stream, particularly during bear markets.

How Did Markets React?

The potential restrictions have raised concerns in the crypto industry, which spent heavily on political donations in the 2023-2024 election cycle. Coinbase, in particular, has been a major political player, contributing $1 million to Donald Trump’s inauguration and supporting initiatives aligned with his administration.

Analysts note that the bill’s bipartisan support is eroding, with some lawmakers now questioning whether it can pass this year. Nathan Dean of Bloomberg Intelligence said the odds of the bill passing in the first half of 2026 have dropped below 70%.

What Are Analysts Watching Next?

The Senate Banking Committee is expected to mark up the bill soon, but tensions over stablecoin rewards have complicated negotiations. A potential compromise is to allow only entities with banking licenses to offer stablecoin rewards, a middle path that could satisfy both crypto and banking interests.

Industry insiders warn that even if restrictions are imposed, crypto companies may find new ways to reward users, shifting the incentive models rather than eliminating them.

Banking groups, such as the American Bankers Association, have pushed for tighter regulations, arguing that stablecoin rewards threaten community lending and financial stability. They claim crypto platforms lack the safeguards of FDIC-insured products and could weaken the traditional banking system.

The outcome of this debate will have significant implications for the future of stablecoins in the U.S. and the broader crypto market. If Coinbase and other platforms lose the ability to offer rewards, it could affect user behavior, platform revenue, and competitiveness on the global stage.