Coinbase Threatens to Pull Backing for Senate Crypto Bill: Report
Coinbase is threatening to withdraw help for main crypto laws if Senate negotiators insert restrictions on stablecoin rewards past enhanced disclosure necessities, escalating tensions forward of a crucial markup scheduled for January 15.
The largest US crypto change could rethink backing the digital-asset market construction invoice if the ultimate textual content contains language that stops platforms from providing incentives to prospects holding stablecoins, in accordance to Bloomberg.
A Coinbase consultant directed Bloomberg to feedback Brian Armstrong made in December, the place the CEO predicted that banks “would in a couple of years come to foyer for” stablecoin yield, regardless of their present opposition.
The risk comes as lawmakers race to finalize laws that has already missed a number of deadlines all through 2025, with Senate Banking Committee Chair Tim Scott setting this week’s markup as a agency deadline after months of stalled negotiations.
Crypto companies ramp up lobbying in Washington as a key Senate vote on U.S. market construction invoice approaches.#USSenate #CryptoBillhttps://t.co/bbNSAzfE4r
— Cryptonews.com (@cryptonews) January 8, 2026
Banking Industry Pushes for Broader Yield Restrictions
Traditional banking teams are lobbying to develop restrictions past what Congress established within the GENIUS Act, which bars stablecoin issuers from paying direct curiosity however permits third-party platforms to provide rewards.
One choice into consideration would restrict rewards to regulated monetary establishments, a transfer backed by banking pursuits who argue that yield-bearing stablecoin accounts may drain deposits from group banks.
The American Bankers Association wrote in a current letter that “if billions are displaced from group financial institution lending, small companies, farmers, college students, and residential consumers in cities like ours will undergo.“
The group warned that crypto exchanges can’t replicate FDIC-insured merchandise or fill the lending hole created by deposit outflows.
Coinbase has applied for a national trust charter that might ultimately permit it to provide rewards beneath such guidelines.
However, crypto-native companies are pushing to protect platform-based incentives as a viable mannequin even with out banking licenses, warning that broader restrictions may get rid of competitors within the sector.
Stablecoin Rewards Generate Critical Revenue for Coinbase
For Coinbase, the rewards signify a major income stream value defending.
The change and Circle Internet Group share curiosity earnings generated from reserves backing Circle’s USDC stablecoin, with USDC parked at Coinbase offering regular income that turns into particularly necessary throughout bear markets.
Coinbase additionally owns a small stake in Circle, at present the biggest stablecoin issuer in compliance with US legislation.
The platform encourages customers to maintain USDC by providing 3.5% rewards on Coinbase One balances.
If the market construction invoice bans such incentives, fewer prospects could maintain stablecoins on the change, probably decreasing Coinbase’s complete stablecoin income, which Bloomberg information tasks reached $1.3 billion in 2025.
Faryar Shirzad, Coinbase’s chief coverage officer, argued in a current put up that preserving reward schemes is necessary for sustaining greenback supremacy, noting that China introduced plans to begin paying curiosity on its digital yuan beginning January 1, 2026.
“Undermining the supremacy of the USD has been a longstanding objective of the PRC—the Senate banning rewards can be an enormous help to China’s efforts,” he wrote.
The Senate Banking Committee marks up the Market Structure invoice subsequent week, and stablecoin rewards stay beneath debate. Congress already settled this in GENIUS—reopening it now solely creates uncertainty and dangers the way forward for the US Dollar as commerce strikes onchain. Here’s why…
— Faryar Shirzad
(@faryarshirzad) January 7, 2026
Bipartisan Support Erodes as Midterms Approach
While the Trump administration helps swift legislative motion, the stablecoin rewards dispute has fractured bipartisan backing for the market construction invoice.
Senate Agriculture Committee Chair John Boozman is considering delaying his committee’s January 15 vote to permit extra time for negotiations with Democratic lead negotiator Cory Booker.
Boozman acknowledged earlier this week that he supposed to maintain the vote subsequent week no matter bipartisan help. Booker expressed hope on Thursday that the 2 sides may attain an settlement.
Adding to the stalling vote, TD Cowen warned earlier this month that the 2026 midterm elections could delay passage until 2027, with Senate Democrats probably withholding help as lawmakers place for the subsequent cycle.
Bloomberg Intelligence analyst Nathan Dean steered the markup’s lack of bipartisan help could push odds of first-half passage under 70%.
— Cryptonews.com (@cryptonews) January 7, 2026
The legislative push unfolds as a number of Senate committees put together parallel markups, with White House crypto czar David Sacks urgent lawmakers to act this month amid momentum to create clearer regulatory frameworks for digital property.
Industry insiders imagine that even when restrictions go, crypto firms will discover new methods to reward customers, making a regulatory sport of whack-a-mole as companies search various incentive buildings.
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