Coinbase has drawn a clear line in Washington: if lawmakers narrow the rules around stablecoin rewards, the company may reconsider its support for a broader crypto market structure bill. The dispute centers on whether third-party platforms can keep offering rewards tied to user balances. For large exchanges, that is not a side issue. It goes straight to the economics of the business.
Reward rules emerge as a pressure point in U.S. legislation
The GENIUS Act already bars stablecoin issuers from paying direct interest, but it still allows outside platforms to reward users based on balances. Coinbase argues that this setup protects competition and leaves room for product development. Bloomberg reported that lawmakers are considering language that would confine rewards to regulated financial institutions, a move that has triggered strong opposition from crypto firms.
Coinbase has applied for a national trust charter as it tries to align with regulatory expectations. Even so, company executives say innovation should not depend on having bank-like status. Coinbase works closely with Circle, the issuer of USDC, and receives a share of interest income generated by reserve assets. On selected Coinbase One balances, rewards of about 3.5% are still available.
A projected $1.3 billion business line is now in focus
Stablecoin incentives have grown into a major source of revenue for Coinbase. The report said stablecoin-related revenue could reach $1.3 billion in 2025. If reward programs are cut back, that outlook would weaken sharply and create a direct hit to earnings. The impact is broader than one feature on one platform. Lower rewards would also reshape how digital asset companies build profit around stablecoin holdings.
Banking groups frame the issue as a fight over deposits
Traditional banking organizations are pressing lawmakers to impose tighter limits, arguing that reward-style programs could pull deposits away from banks. They say lower deposit levels may reduce lending capacity for small businesses and homebuyers, while also stressing that crypto platforms do not offer FDIC-style protections. Coinbase rejects that comparison. The company says restrictive rules could leave U.S. firms at a disadvantage in global competition.
Chief Policy Officer Faryar Shirzad has pointed to China’s digital yuan as an external competitive force, saying foreign rivals already operate with incentive-based models. In that context, the debate is not only about compliance language. It is also about how much flexibility U.S. crypto companies retain in product design.
Broader market structure talks face new friction
The disagreement is now putting pressure on a wider legislative package meant to clarify oversight between the SEC and the CFTC. Bloomberg said lawmakers worry the stablecoin reward fight could slow progress on the full bill, as negotiators increasingly treat the issue as decisive.
Coinbase’s stance also carries political weight. The report noted that the company ranks among the largest donors to President Donald Trump. The Trump administration has been pushing for crypto legislation to move quickly, but resistance from one of the industry’s biggest players has complicated that path. Coinbase remains firm on defending stablecoin rewards, and the final outcome could shape the future profitability of U.S. crypto platforms.