Regulation Scrutiny on Stablecoin Rewards as Coinbase Faces CLARITY Act Deadline

As the CLARITY Act advances, regulators weigh limits on stablecoin incentives; Coinbase warns that curbs could alter revenue and push stablecoins toward regulated institutions.

Rich by Coin

2026-01-12

Just ahead of the Jan. 15 deadline for the CLARITY Act crypto bill, Coinbase is stepping up efforts to provide rewards on stablecoin holdings. Coinbase said that it might reconsider its support for the Crypto Bill if the US lawmakers decided to act against stablecoin rewards. Some US policymakers are considering allowing stablecoin rewards only at regulated financial institutions, but not crypto-native firms.

On the other hand, Coinbase has already applied for a national banking charter and earns significant income from USDC-based rewards, offering around 3.5% to users. CEO Brian Armstrong has previously shared concerns over the proposed restrictions in the Crypto bill by the US lawmakers. The exchange stated that this feature is very critical to its own business model. Stablecoin rewards represent a meaningful revenue stream for Coinbase.

Coinbase offers rewards of around 3.5% on USDC balances for certain customers. According to Bloomberg estimates, Coinbase’s stablecoin-related revenue surged to $1.3 billion in 2025. If the forthcoming bill restricts or bans such incentives, fewer users may hold stablecoins on the platform, which can impact the exchange’s revenue. Some US lawmakers are considering a proposal to restrict the stablecoin rewards to regulated financial institutions.

Moreover, some banks and financial players argued that such a reward mechanism could possibly draw deposits away from traditional lenders. Crypto exchanges and the constellation of stablecoin-affiliated companies are not designed to fill the lending gap, nor will they be able to offer FDIC-insured products. Coinbase has filed for a national trust charter, which could allow it to provide rewards under regulatory norms. Other market players like Trump’s World Liberty Financial have also made similar moves.

In a recent letter, the American Bankers Association wrote: “If billions are displaced from community bank lending, small businesses, farmers, students, and home buyers in towns like ours will suffer.” The final impact will depend on the exact wording of the bill.