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 The debate follows earlier passage of the GENIUS Act, which bans stablecoin issuers from paying interest directly, but leaves room for rewards via third parties. Banks now plan to cloe this loophole. With stablecoins generating hundreds of millions of dollars in revenue for Coinbase and the Treasury warning that widespread adoption could divert trillions from banks, the outcome of the legislation carries major implications for both crypto firms and the traditional banking sector.
 <h2 id="coinbase-weighs-reconsidering-clarity-act">Coinbase Weighs Reconsidering CLARITY Act</h2>
 US-based crypto exchange Coinbase is intensifying its lobbying efforts in Washington as lawmakers debate provisions in a major crypto market structure bill that could impact decentralized finance and stablecoin-based reward products. According to a <a href="https://www.bloomberg.com/news/articles/2026-01-11/coinbase-raises-pressure-as-crypto-bill-moves-to-senate-markup" rel="noopener noreferrer nofollow">Bloomberg report</a> that was published Sunday, Coinbase suggested that it may reconsider its support for the proposed CLARITY Act if the legislation moves to restrict stablecoin issuers and affiliated platforms from offering yield or rewards to users.
 The issue centers on whether stablecoin-related incentives, like rewards paid through crypto exchanges, should be treated similarly to interest-bearing bank products. Banking industry groups argue that these products threaten traditional deposits and could accelerate capital flight from the regulated banking system. Some anti-DeFi advocacy groups reportedly took the <a href="https://x.com/EleanorTerrett/status/2009795675635306737" rel="noopener noreferrer nofollow">campaign public</a> by running advertisements on Fox News urging viewers to pressure senators to support restrictions on decentralized finance provisions they claim pose systemic risks.
 At the same time, crypto industry advocates mounted their own grassroots response. <a href="https://x.com/standwithcrypto/status/2008593785903870358" rel="noopener noreferrer nofollow">Stand With Crypto</a>, a pro-crypto advocacy group, says more than 135,000 emails have been sent to US senators urging them to protect stablecoin rewards and prevent what they see as an overreach that would stifle innovation. The debate is expected to escalate even more this week, as the US Senate Banking Committee prepares to address the issue during a markup session.
 The controversy is complicated by the existing GENIUS Act, which became law in July. While the GENIUS Act prohibits stablecoin issuers from directly offering interest or yield to token holders, it does not explicitly ban rewards offered through third-party platforms like crypto exchanges. This ambiguity left room for issuers to partner with exchanges to provide yield-like incentives. It is this loophole that traditional banking groups are now pushing lawmakers to close through the CLARITY Act.
 Coinbase, for its part, applied for a national trust banking charter, which would allow it to legally offer certain reward products under existing frameworks.&nbsp;
 Stablecoins have become an important <a href="https://investor.coinbase.com/files/doc_financials/2025/q3/Q3-25-Shareholder-Letter.pdf" rel="noopener noreferrer nofollow">revenue stream</a> for the exchange, and generated close to $247 million in the fourth quarter, alongside $154.8 million from blockchain rewards. A ban on rewards tied to products like Circle’s <a href="https://coincodex.com/crypto/usd-coin/" rel="noopener noreferrer nofollow">USDC</a>, which offers yields of around 3.5%, could materially impact Coinbase and other major trading platforms.
 Banking advocates warn that the stakes extend far beyond crypto firms. The US Treasury <a href="https://home.treasury.gov/system/files/221/TBACCharge2Q22025.pdf" rel="noopener noreferrer nofollow">estimated</a> earlier last year that widespread stablecoin adoption could divert as much as $6.6 trillion from traditional banks, raising concerns about liquidity and financial stability.
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Coinbase May Reconsider Its Support for the CLARITY Act

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