Key Highlights
- Coinbase may pull support for the CLARITY Act if stablecoin reward limits are added, Bloomberg reported.
- Banking groups warn stablecoin rewards could drain trillions from the traditional banking system.
- The Senate Banking Committee will debate the issue this week, risking delays to crypto regulation.
Coinbase, the largest crypto exchange in the US, is intensifying pressure on lawmakers in Washington as a key part of the proposed CLARITY Act could limit how stablecoin rewards are offered, a move that has sparked a broader debate between the crypto industry and the traditional banking sector.
According to a report by Bloomberg, Coinbase has issued a serious warning that it may withdraw support for the CLARITY Act unless parts of the act restricting stablecoin rewards is removed.
What is happening and why it matters
The Digital Asset Market Clarity Act of 2025, known as the CLARITY Act in short, is a major market‑structure bill being crafted by the US Senate Banking Committee, with a markup session scheduled this Thursday.
Bloomberg reported that Coinbase may reconsider backing the bill if it goes beyond disclosure requirements and places limits on rewards offered by exchanges and platforms.
This matters because stablecoin rewards, where users earn yield for holding tokens like USDC, have become an important source of revenue for crypto exchanges.
For Coinbase, stablecoins generated nearly $247 million in revenue in Q4 along with $155 million from blockchain rewards, illustrating how significant these offerings are to its business.
Who is involved and what they want
Coinbase wants to preserve the ability of exchanges to offer rewards to users who hold stablecoins on their platforms. The company has applied for a national trust banking charter, which would formally allow it to provide yield under a regulated framework.
At the same time, other legislators and lobbying groups in the banking sector believe that the reward should be restricted to regulated financial institutions in order to safeguard the traditional banking system.
Banking lobbyists caution that the stablecoin products may drain deposits out of banks because of their high yields, which may undermine community lending and financial stability. The US Treasury has previously estimated that widespread stablecoin adoption could divert trillions of dollars away from the banking sector.
On the other side, crypto supporters, including the group Stand With Crypto, have mobilized public backing. Stand With Crypto claims more than 135,000 emails have been sent to senators urging them to protect stablecoin rewards in the legislation.
Background: GENIUS Act and past policy moves
The debate builds on the GENIUS Act, signed into law last July, which prohibited stablecoin issuers from offering interest or yield purely for holding the tokens. However, that law did not explicitly restrict third‑party platforms like Coinbase from offering rewards, creating the current regulatory ambiguity.
Recent past news shows this policy tension is not new. Earlier in 2025, the crypto industry and banking groups clashed over similar stablecoin provisions in federal regulation proposals.
The core question has been how far Congress should go in applying traditional financial rules to digital asset markets.
What comes next
The Senate Banking Committee’s markup this Thursday will be a critical moment. If the CLARITY Act includes restrictions on rewards, it could delay the bill’s overall progress.
Some analysts believe the legislation may not pass Congress until as late as 2027 or 2029, especially with the 2026 US midterm elections looming and complicating bipartisan consensus.
Senate Banking Committee Chair Tim Scott has said that he believes the bill could be passed sooner, however, the stablecoin rewards battle demonstrates that legislators have a difficult time trying to strike a balance between innovation and financial regulation.
Also Read: Quantum Computing Poses Deeper Risks to Bitcoin: Coinbase Analyst
