Coinbase May Reconsider Its Support for the CLARITY Act

US-based crypto exchange Coinbase is intensifying its lobbying efforts in Washington as lawmakers debate the CLARITY Act, a bill that could restrict stablecoin issuers from offering yield or rewards to users.

The Regulatory Loophole Conflict

The issue centers on the GENIUS Act, which bans stablecoin issuers from paying interest directly but allows rewards via third parties. Banks are now pushing to close this "loophole" via the CLARITY Act, arguing these products threaten traditional deposits and accelerate capital flight.

Economic Stakes & Impact

Coinbase Revenue: Generated $247M from stablecoins and $154.8M from rewards in Q4.
Systemic Risk: Treasury estimates stablecoins could divert $6.6 trillion from banks.
Public Advocacy: Over 135,000 emails sent to senators via "Stand With Crypto."
Product Impact: Potential ban on Circle’s USDC rewards (approx. 3.5% yield).

Lobbying and Industry Response

Coinbase suggested it may reconsider its support for the CLARITY Act if it moves to restrict rewards. Banking industry groups have taken the campaign public, running advertisements on Fox News to urge senators to support restrictions on decentralized finance provisions they claim pose systemic risks.

The US Treasury estimated that widespread stablecoin adoption could divert as much as $6.6 trillion from traditional banks, raising concerns about liquidity and financial stability across the regulated banking system.