Coinbase Threatens to Withdraw Support for US Crypto Market Bill Over Stablecoin Rewards

Coinbase has warned it may reconsider its support for the U.S. crypto market structure bill if it imposes broader restrictions on stablecoin rewards. The company has increased lobbying efforts as the bill is set to be unveiled, with Senate committees planning to hold a markup later in the week. A major point of contention is whether platforms like Coinbase should be allowed to offer interest on stablecoin holdings according to The Block.

The bill, expected to clarify regulatory boundaries for digital assets, could limit stablecoin rewards to regulated financial institutions. This move is supported by banks, which argue that yield-bearing stablecoin accounts may drain deposits from traditional lenders. Coinbase, which has applied for a national trust charter, could eventually qualify under such rules.

Stablecoin rewards have become a key revenue source for Coinbase and other crypto platforms. The exchange shares interest income from reserves backing Circle's USDC and offers users a 3.5% yield on Coinbase One balances. Bloomberg data estimates that stablecoin revenue for Coinbase reached $1.3 billion in 2025. A ban could significantly reduce platform holdings and revenues.

Why Did This Happen?

The dispute over stablecoin rewards reflects a broader tension between crypto firms and traditional banks. Banks are lobbying to close perceived loopholes in current laws that allow exchanges to offer interest on stablecoin balances. The banking industry argues that these rewards pose risks to financial stability and consumer protection according to Coinpedia.

Crypto advocates, including Coinbase, counter that restricting rewards undermines competition and innovation. They warn that such rules could weaken U.S. leadership in digital currencies, especially as China recently began offering interest on its digital yuan according to TradingView.

How Did Markets React?

The potential restrictions on stablecoin yields have raised concerns among crypto investors. Some see the debate as a critical moment for the U.S. crypto industry. Reddit users and crypto communities have largely supported maintaining stablecoin rewards, arguing that they provide an alternative to low-interest traditional banking products according to CryptoNews.

The Senate Banking Committee is preparing to vote on the bill, with Chairman Tim Scott emphasizing the need for a markup by January 15. However, there are concerns about whether the bill will have enough bipartisan support to move forward according to Bloomberg.

What Are Analysts Watching Next?

Analysts are closely monitoring whether the Senate can reach a compromise on stablecoin rewards. Bernstein analysts argue that the bill must advance by the second quarter of 2026 to avoid being overtaken by midterm election dynamics. The Trump administration has prioritized crypto legislation, but delays or failures to pass the bill could slow progress according to CoinDesk.

Banks continue to push for stricter rules, with the American Bankers Association warning that if billions are displaced from community bank lending, it could harm small businesses, farmers, and homebuyers. However, crypto industry leaders argue that such restrictions could stifle innovation and reduce user choice in financial services according to TradingView.

The outcome of the bill could have long-term implications for the U.S. crypto market. If restrictions are imposed, it could push users toward offshore platforms with looser rules. On the other hand, if rewards remain in place, the U.S. could strengthen its position as a global leader in digital assets according to Bloomberg.