Coinbase has warned that it could pull its support for the CLARITY Act if the bill restricts its ability to offer stablecoin rewards. A Bloomberg report published on January 11, 2026 said the issue has become one of the sharpest points of conflict as the U.S. Senate is expected to act within days.
USDC rewards sit at the center of the dispute
The fight comes after the GENIUS Act became law in July 2025. That law created a federal framework for stablecoin oversight, including fully backed reserves, audits, and stronger consumer protections. It bars stablecoin issuers from paying interest or yield directly to holders, but it does not prohibit third-party platforms from distributing rewards. That gap is what allows Coinbase to keep its current model in place.
Coinbase currently offers about 3% to 4% rewards on USDC balances held on its platform. For the exchange, this is not a minor product feature. It is tied to customer value and company revenue at the same time. Bank groups want the new market-structure bill to close that opening.
Banking groups say the practice weakens traditional deposits
Organizations including the American Bankers Association argue that stablecoin rewards pull deposits out of banks, reduce lending capacity for small businesses and homebuyers, and create unfair competition because crypto platforms do not have FDIC insurance. They are lobbying lawmakers to stop the arrangement through the new bill.
Coinbase rejects that line of attack. Chief Policy Officer Faryar Shirzad has described the argument as a competition issue rather than a financial stability issue. Coinbase says banning rewards would raise costs for consumers, cut down user choice, and weaken the U.S. payments system.
Senators are weighing a compromise before support slips
The debate is now starting to erode bipartisan support for the wider crypto market-structure bill. The administration wants quick passage, but senators face a difficult trade-off. Move too fast, and the disagreement may fracture support. Slow down, and the broader bill could lose momentum over a single provision.
One compromise under discussion would allow rewards only when users take an active step, such as staking or locking funds, rather than earning a return simply by holding stablecoins. The report said it is still unclear whether that approach would attract enough votes in the Senate.
The deeper fight is over who gets the reserve yield
Coinbase also argues that a ban on rewards could weaken the dollar’s position in digital assets. The report noted that China began paying interest on its digital yuan on January 1, 2026. In Coinbase’s view, limiting stablecoin incentives in the U.S. could reduce the ability of domestic platforms to attract users and capital.
Since the GENIUS Act took effect, stablecoin adoption has accelerated, with total market value now above $300 billion. If some version of Coinbase’s reward model survives, U.S. platforms may keep drawing in users and funds. If banks succeed in shutting it down, activity may move toward offshore issuers and non-U.S. platforms. The basic struggle is clear: who should benefit from the interest generated by stablecoin reserves—banks, platforms, issuers, or everyday users.