Coinbase ups pressure as crypto bill moves to senate markup

Coinbase Global is escalating pressure on US lawmakers to preserve its ability to offer rewards to customers who hold stablecoins — an offering the company sees at risk if certain restrictions under discussion make it into a major crypto bill set to be unveiled Monday.

The largest US crypto exchange may reconsider its support for the digital-asset market-structure bill — scheduled for markup in at least one Senate committee on Thursday — if the text includes anything beyond enhanced disclosure requirements tied to rewards, according to a person familiar with the firm’s thinking.

A Coinbase representative directed Bloomberg News to comments that Brian Armstrong, the company’s co-founder and CEO, made in a post on X in December. He predicted that banks — which have broadly opposed stablecoin yield — would in a few years come to lobby for it.

One option under consideration, according to industry insiders, would restrict the ability to offer rewards to regulated financial institutions — a move backed by some in the banking industry who argue that yield-bearing stablecoin accounts could siphon deposits away from traditional banks. Coinbase has applied for a national trust charter, which could eventually allow it to offer such rewards under those rules. But crypto-native firms are pushing to preserve platform-based rewards as a viable model even without a charter, warning that broader restrictions could upend competition in the sector.

The threat to withdraw support packs a punch. The cryptocurrency industry was the largest corporate spender during the 2023-2024 election cycle, funneling huge sums of money toward favored candidates. Coinbase donated $1 million to Donald Trump’s presidential inauguration and is among the companies contributing donations to finance the president’s proposed ballroom for the White House.

For Coinbase, the rewards are an important issue. The exchange and Circle Internet Group Inc. share some interest income generated from the reserves backing Circle’s USDC stablecoin. USDC parked at Coinbase provides a steady revenue stream that’s key, especially during bear markets. Coinbase also owns a small stake in Circle, currently the largest stablecoin issuer in compliance with a US law passed in July.

Coinbase encourages users to hold USDC on its exchange by offering 3.5% rewards on their Coinbase One balances, for example. If the market-structure bill bans that incentive, fewer people may hold stablecoins on the exchange, and Coinbase’s total stablecoin revenue – projected to have reached $1.3 billion in 2025, according to Bloomberg data – could potentially decline.

Of course, the devil is in the details, and the impact isn’t entirely clear, and will depend on the bill’s exact wording. What’s become clear, though, is that some language on rewards will be added to the bill, according to people familiar with the discussions.

GENIUS Act 

Trump’s second administration quickly delivered wins for the digital asset industry, including the first federal regulatory framework for stablecoin issuers, the so-called GENIUS Act in July. The bill’s signing unleashed a wave of announcements spanning from retailers to traditional financial institutions interested in entering the stablecoin sector. The Trump family itself has gotten in on the action even before it became law, when World Liberty Financial its members co-founded released its own stablecoin, called USD1.

While the administration supports legislation passing swiftly, the stablecoin rewards question has eroded the bipartisan support for the market-structure bill. Coinbase’s warning that it may consider pulling support is a sign of rising tensions that could contribute to delays in the bill’s passage — which could mean the legislation won’t get done this year at all. Markup’s lacking of bipartisan support may push the odds of something passing in the first half of the year to less than 70%, according to Bloomberg Intelligence analyst Nathan Dean.

The GENIUS Act prohibits stablecoin issuers from paying any form of interest or yield solely in connection with the holding of the tokens, but it does not prevent third-party distribution partners like Coinbase from offering rewards tied to their customers’ balances.

The banking industry has decried the idea of exchanges paying stablecoin rewards, arguing that they threaten to drain deposits from the banking system and weaken community lending.

“If billions are displaced from community bank lending, small businesses, farmers, students, and home buyers in towns like ours will suffer,” the American Bankers Association wrote in a recent letter. “Crypto exchanges and the constellation of stablecoin-affiliated companies are not designed to fill the lending gap, not will they be able to offer FDIC-insured products, a point they omit from their aggressive advertising.”

The crypto industry, by contrast, paints the banking sector effort as a move to undo what was already settled in the GENIUS Act. Faryar Shirzad, chief policy officer at Coinbase, added in a recent X post that preserving rewards schemes tied to stablecoin is important for maintaining the dollar’s supremacy, noting that China recently announced plans to start paying interest on its digital yuan, a central bank digital currency.

The tension has left senators in a difficult position: under pressure from the administration to pass further legislation, they’re forced to make a decision on an issue where it’s difficult to compromise, industry participants and observers said.

A potential middle path is to only allow entities with banking licenses or financial institutions to offer rewards on stablecoin balances, people familiar with the discussions said. Five crypto firms have recently received conditional approvals from the US Office of the Comptroller of the Currency to become national trust banks. These approvals also drew fierce opposition from the banking lobby arguing that the use case for the limited trust charter is being stretched by crypto firms that could potentially pose a threat to the stability of the US financial system. Given the recent approvals, a market-structure bill that allows firms with trust charters to offer yield could appease a portion of the crypto industry.

If restrictions are imposed, some industry insiders believe that would only kick off the game of whack-a-mole, as crypto companies seek out new ways to reward users.

“There’s no world in which we won’t be able to reward consumers for taking actions within applications,” William Gaybrick, president of technology and business at payments giant Stripe said in an interview last year. “In a world where you’re holding stablecoins within an app, that application will find some way to give you credit for doing so.”

© 2026 Bloomberg

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