The U.S. Senate is set to mark up a sweeping crypto market-structure bill this week, but a key sticking point has emerged: whether yield-bearing stablecoin accounts should be restricted to banks. Coinbase is actively lobbying to ensure it can continue rewarding users for holding stablecoins.
According to Bloomberg, citing a person familiar with the matter, Coinbase may withdraw its support for the bill if it goes beyond disclosure requirements and restricts non-bank firms—like the Nasdaq-listed exchange—from offering rewards. Coinbase currently offers a yield program for users holding USDC, a dollar-pegged stablecoin issued by Circle. Through its Coinbase One subscription, users earn 3.5% APY. That revenue reached $355 million in Q3, acting as a buffer when trading volumes decline.
A proposal backed by some banks would limit stablecoin reward programs to regulated financial institutions. Banks argue these rewards pull deposits from traditional banks, potentially harming “small businesses, farmers, students and home buyers” by diverting funds from community bank lending. Coinbase Chief Policy Officer Faryar Shirzad countered on social media that banks earn roughly $360 billion annually by parking $3 trillion at the Federal Reserve and from swipe fees. Stablecoin rewards, he said, “introduce real competition in payments.”
Cornell Study Cited as Evidence
Shirzad cited an independent study from Cornell University: “Stablecoin adoption does not reduce bank lending. In fact, rewards would need to approach 6% to meaningfully affect deposits. No one is offering anything close to that.” The research has become a key argument to counter bank claims that rewards drain deposits.
The bill enjoys backing from the Trump administration, but the stablecoin reward dispute has started to fray bipartisan support. On Polymarket, traders see a 68% chance of passage this year; on Kalshi, odds stand at 70%.
Compromise on the Table: Banking Licenses
Some lawmakers are weighing a compromise: only firms with banking licenses may offer rewards. In December last year, five crypto firms—including Circle, Ripple, and BitGo—received conditional approvals to become federally chartered trust banks. Even so, the battle may not end; companies would likely find alternative ways to reward users for holding funds.