Coinbase Threatens to Pull Backing for Senate Crypto Bill: Report

Coinbase Threatens to Pull Backing for Senate Crypto Bill... Coinbase may reconsider supporting digital-asset market structure legislation if Senate negotiators include language preventing platforms from offering stablecoin incentives, as traditional banking groups push restrictions beyond the GENIUS Act framework that bars issuers from paying direct interest... Coinbase is threatening to withdraw support for major crypto legislation if Senate negotiators insert restrictions on stablecoin rewards beyond enhanced disclosure requirements, escalating tensions ahead of a critical markup scheduled for January 15.The largest US crypto exchange may reconsider backing the digital-asset market structure bill if the final text includes language that prevents platforms from offering incentives to customers holding stablecoins, according to Bloomberg.A Coinbase representative directed Bloomberg to comments Brian Armstrong made in December, where the CEO predicted that banks "would in a few years come to lobby forâEUR stablecoin yield, despite their current opposition.The threat comes as lawmakers race to finalize legislation that has already missed multiple deadlines throughout 2025, with Senate Banking Committee Chair Tim Scott setting this week's markup as a firm deadline after months of stalled negotiations. Crypto firms ramp up lobbying in Washington as a key Senate vote on U.S. market structure bill approaches.#USSenate #CryptoBillhttps://t.co/bbNSAzfE4r- Cryptonews.com (@cryptonews) January 8, 2026 Banking Industry Pushes for Broader Yield RestrictionsTraditional banking groups are lobbying to expand restrictions beyond what Congress established in the GENIUS Act, which bars stablecoin issuers from paying direct interest but allows third-party platforms to offer rewards.One option under consideration would limit rewards to regulated financial institutions, a move backed by banking interests who argue that yield-bearing stablecoin accounts could drain deposits from community banks.The American Bankers Association wrote in a recent letter that "if billions are displaced from community bank lending, small businesses, farmers, students, and home buyers in towns like ours will suffer."The group warned that crypto exchanges cannot replicate FDIC-insured products or fill the lending gap created by deposit outflows.Coinbase has applied for a national trust charter that could eventually allow it to offer rewards under such rules.However, crypto-native firms are pushing to preserve platform-based incentives as a viable model even without banking licenses, warning that broader restrictions could eliminate competition in the sector.Stablecoin Rewards Generate Critical Revenue for CoinbaseFor Coinbase, the rewards represent a significant revenue stream worth protecting.The exchange and Circle Internet Group share interest income generated from reserves backing Circle's USDC stablecoin, with USDC parked at Coinbase providing steady revenue that becomes especially important during bear markets.Coinbase also owns a small stake in Circle, currently the largest stablecoin issuer in compliance with US law.The platform encourages users to hold USDC by offering 3.5% rewards on Coinbase One balances.If the market structure bill bans such incentives, fewer customers may hold stablecoins on the exchange, potentially reducing Coinbase's total stablecoin revenue, which Bloomberg data projects reached $1.3 billion in 2025.Faryar Shirzad, Coinbase's chief policy officer, argued in a recent post that preserving reward schemes is important for maintaining dollar supremacy, noting that China announced plans to start paying interest on its digital yuan starting January 1, 2026."Undermining the supremacy of the USD has been a longstanding goal of the PRCâEUR"the Senate banning rewards would be a big assist to China's efforts," he wrote. The Senate Banking Committee marks up the Market Structure bill next week, and stablecoin rewards remain under debate. Congress already settled this in GENIUSâEUR"reopening it now only creates uncertainty and risks the future of the US Dollar as commerce moves onchain. HereâEUR(TM)s whyâEUR¦- Faryar Shirzad (@faryarshirzad) January 7, 2026 Bipartisan Support Erodes as Midterms ApproachWhile the Trump administration supports swift legislative action, the stablecoin rewards dispute has fractured bipartisan backing for the market structure bill.Senate Agriculture Committee Chair John Boozman is considering delaying his committee's January 15 vote to allow more time for negotiations with Democratic lead negotiator Cory Booker.Boozman stated earlier this week that he intended to hold...