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.
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.
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 for” stablecoin yield, despite their current opposition.
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.“
Traditional 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.
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.
The group warned that crypto exchanges cannot replicate FDIC-insured products or fill the lending gap created by deposit outflows.
