High Stakes For Coinbase<\/h2>\n
The CLARITY Act is expected to be marked up in at least one Senate committee this Thursday, and Coinbase’s potential withdrawal could have significant implications for the bill.\u00a0<\/p>\n
A source familiar with Coinbase’s stance told Bloomberg that the exchange would re-evaluate its support if the legislation veers too far from its interests, particularly regarding stablecoin incentives.<\/p>\n
Some insiders suggest the bill might restrict the ability to provide rewards to regulated financial institutions, a move that aligns with the banking sector’s concerns about losing deposits to crypto platforms.<\/p>\n
Coinbase currently holds applications for a national trust charter that could permit it to offer those kinds of rewards under regulatory rules. However, many crypto-native firms are pushing back against potential restrictions, arguing that such measures could disrupt competition in the market.<\/p>\n
The stakes for Coinbase are high, as rewards programs play a crucial role in its business model. The exchange allows users to earn 3.5% rewards on Circle\u2019s USDC holdings.\u00a0<\/p>\n
Should the market-structure bill include bans on these incentives, fewer users might choose to hold stablecoins on the platform. This could jeopardize an anticipated revenue stream projected at $1.3 billion in 2025, according to Bloomberg.<\/p>\n
Banking Vs. Crypto<\/h2>\n
The GENIUS Act, passed into law in July of last year, prohibits stablecoin issuers from offering interest on token holdings, and does not prevent third-party partners like Coinbase from providing rewards tied to customer balances.\u00a0<\/p>\n
The banking industry, however, argues that allowing exchanges to pay such rewards could negatively impact bank deposits and, consequently, community lending.\u00a0<\/p>\n