Coinbase Global Inc. has expressed substantial concerns regarding the current draft of a pivotal crypto market-structure bill moving through the U.S. Senate, indicating it might rescind its support if new provisions limit the company’s ability to offer rewards on stablecoin holdings. This development introduces additional complexity into the legislative process, which is currently at a critical stage with a Senate committee markup scheduled this week.
The bill, aimed at structuring the burgeoning cryptocurrency market, is contending with proposed modifications that would restrict the provision of stablecoin rewards strictly to regulated banks or financial institutions possessing a trust charter. Industry observers note that the banking lobby is the primary force advocating for these amendments, while firms native to the cryptocurrency ecosystem are pushing back vigorously against such constraints.
Stablecoin reward programs form a crucial revenue stream for Coinbase, predominantly linked to the interest earned on USDC reserves, which are jointly held with Circle Internet Group. In 2025, Coinbase reported approximately $1.3 billion in revenue derived from activities connected to stablecoins. Imposing limitations on rewards could materially diminish the balances of USDC held on Coinbase’s platform and thereby exert a notable impact on the company’s earnings profile.
This fundamental disagreement over stablecoin reward eligibility has notably weakened the bipartisan coalition supporting the legislation, introducing a heightened risk of procedural delays or potential amendments that could further complicate the bill's passage. While the recently enacted GENIUS Act prohibits stablecoin issuers themselves from providing yield, it deliberately permits third-party entities such as cryptocurrency exchanges to continue offering rewards. The current proposed changes seek to close this exception, effectively curtailing the ability of non-bank entities to offer such incentives.
Crypto firms contend that the proposed banking-driven restrictions would undermine competition within the sector, effectively reversing previous political compromises and potentially impairing the standing of the U.S. dollar in the global financial ecosystem. They argue that keeping the reward mechanisms open to broader market participants is essential for innovation and market dynamism.
From an analytical perspective, Bernstein Research has highlighted that the opportunity to pass a comprehensive U.S. crypto market-structure bill is narrowing, with the most significant barrier now centering not on how tokens are classified or how decentralized finance (DeFi) is regulated, but rather on the escalating conflict between traditional banking institutions and the crypto industry regarding the distribution of stablecoin rewards.
According to experts, the bill’s advancement is contingent upon lawmakers reconciling concerns that stablecoins, if left unrestricted, could divert deposits away from conventional banks, potentially upsetting established financial frameworks. This unresolved tension poses a key legislative hurdle as the calendar approaches the second quarter, a timeframe Bernstein warns is critical before the momentum stalls amid the political distractions of the upcoming midterm elections. This caution remains pertinent even if a pro-crypto administration under former President Trump assumes power.
In sum, the negotiation dynamics surrounding the crypto market-structure bill underscore the intricate balance regulators and legislators must strike between fostering innovation through crypto-native firms and safeguarding traditional banking interests, with stablecoin rewards emerging as a focal point of contention.