US-based crypto exchange Coinbase is intensifying its engagement with lawmakers as debate heats up around proposed decentralized finance provisions contained within the wide-ranging CLARITY Act.
The company is reportedly concerned that elements of the bill could undermine core parts of its business model, particularly around stablecoin-related rewards offered through crypto platforms.
According to reports that cited “a person familiar with the firm’s thinking,” Coinbase “may reconsider its support” for the legislation if limits are placed on how stablecoin incentives are distributed.
Those provisions would specifically target the ability of exchanges and third-party platforms to offer rewards tied to stablecoin holdings, even if issuers themselves are restricted from paying yield.
Coinbase declined to publicly comment at the time, leaving its official position implied through ongoing lobbying and industry outreach rather than direct statements.
Traditional banking groups have emerged as vocal opponents of stablecoin reward programs, warning that such products could divert trillions of dollars away from deposits held within the legacy financial system.
That concern has fueled an aggressive political campaign, including televised advertisements urging voters to pressure senators into backing tighter controls on decentralized finance activity.
Crypto advocacy organizations have responded in kind, with Stand With Crypto claiming its supporters have sent more than 135,000 emails to US senators defending stablecoin rewards and related products.
Senate Scrutiny And Legislative Tensions
The debate is set to escalate further when the US Senate Banking Committee addresses the issue during a scheduled markup session later this week.
Lawmakers are weighing how the CLARITY Act should interact with the GENIUS Act, which was passed earlier and already restricts stablecoin issuers from paying interest directly to token holders.
However, that earlier legislation did not clearly prohibit exchanges or partner platforms from offering rewards, creating what banks describe as a regulatory loophole.
Coinbase has positioned itself to operate within existing rules by applying for a national trust banking charter, a move that would formally permit certain reward programs.
Banking industry representatives are now pushing lawmakers to close that gap through the CLARITY Act, arguing that equal rules should apply across financial services.
Billions At Stake For Crypto And Banking Giants
Stablecoins have become a major contributor to Coinbase’s revenue, generating nearly $247 million in the fourth quarter alongside more than $150 million from blockchain rewards.
Restrictions on products such as Circle’s USDC, which currently allows users to earn roughly 3.5%, could significantly reduce income across major crypto trading platforms.
Banks counter that the broader economic impact would be far greater if stablecoins continue to grow unchecked, with Treasury estimates suggesting up to $6.6 trillion could exit traditional banking.
Beyond policy substance, political timing remains uncertain, with analysts warning that upcoming US elections could delay passage until 2027 and implementation until 2029.
Despite those concerns, Senate Banking Committee Chair Tim Scott has expressed confidence that lawmakers can move quickly and “deliver real results for the American people.”