Coinbase Global is pressuring US legislators to preserve its ability to offer rewards to customers who hold stablecoins. The company views this offering as at risk if certain restrictions under discussion make it into a major crypto bill set to be unveiled. Coinbase is the largest US crypto exchange. The company may reconsider its support for the digital-asset market-structure bill, scheduled for markup in at least one Senate committee, if the text includes anything beyond enhanced disclosure requirements tied to rewards, according to a source familiar with the firm’s thinking.
One option under consideration would restrict the ability to offer rewards to regulated financial institutions. This move is backed by some in the banking industry who argue that yield-bearing stablecoin accounts could siphon deposits away from traditional banks. Coinbase has applied for a national trust charter, which could eventually allow it to offer such rewards under those rules. Crypto-native firms are pushing to preserve platform-based rewards as a viable model even without a charter, warning that broader restrictions could upend competition in the sector.
Coinbase encourages users to hold USDC on its exchange by offering 3.5 per cent rewards on their Coinbase One balances, for example. The exchange and Circle Internet Group Inc share some interest income generated from the reserves backing Circle’s USDC stablecoin. USDC parked at Coinbase provides a steady revenue stream that’s key, especially during bear markets. If the market-structure bill bans that incentive, fewer people may hold stablecoins on the exchange.
Coinbase also owns a small stake in Circle, currently the largest stablecoin issuer in compliance with a US law passed in July. Coinbase, led by co-founder and chief executive Brian Armstrong, donated $US1 million to Donald Trump’s presidential inauguration, and is among the companies contributing donations to finance the president’s proposed ballroom for the White House.
