Coinbase Threatens to Pull Support for CLARITY Act Over Stablecoin Reward Limits

Coinbase has warned U.S. lawmakers that it may withdraw its support for the Digital Asset Market Clarity (CLARITY) Act if the bill includes provisions that restrict crypto exchanges from offering stablecoin rewards to customers, according to a new report from Bloomberg.

The move escalates tensions just days before a key Senate committee markup, turning stablecoin yield into one of the most contentious fault lines in U.S. crypto regulation.

A Legislative “Red Line”

According to people familiar with the discussions, Coinbase has made clear that it will oppose the CLARITY Act if lawmakers go beyond disclosure requirements and effectively limit stablecoin rewards to regulated banks only.

The dispute centers on whether rewards paid to users for holding stablecoins (such as USDC) should be classified as “interest,” which would require a banking license. Coinbase and other crypto firms argue these rewards are a competitive feature of blockchain-based finance, while banking groups claim they amount to unregulated deposit-taking.

Coinbase CEO Brian Armstrong and the company’s policy team have warned that banning exchanges from offering rewards would entrench traditional banks’ control over deposits and undermine one of stablecoins’ core use cases.

Why the Stakes Are So High

The issue carries significant financial consequences for Coinbase. Roughly 20% of the company’s revenue is tied to stablecoin-related income, primarily through its USDC partnership with Circle. A prohibition on exchange-based rewards would materially impact Coinbase’s business model and weaken the economics of U.S.-based stablecoins.

More broadly, Coinbase’s threat risks fracturing industry support for the CLARITY Act itself. The bill is widely viewed as the most serious attempt yet to establish a comprehensive U.S. framework for crypto market structure, including clearer jurisdictional lines between regulators.

Keep More On Every Order: 0% Maker, 0.02% Taker

Sign Up Now

Timing Pressure in the Senate

The ultimatum comes at a sensitive moment. The CLARITY Act is scheduled for markup in at least one Senate committee on January 15, leaving lawmakers little time to resolve internal disagreements.

According to Bloomberg, Coinbase has signaled that it could accept enhanced disclosure requirements around rewards, but not an outright ban or bank-only regime.

If Coinbase follows through on its threat, the loss of backing from the largest U.S. crypto exchange could derail momentum behind the bill and delay broader crypto market structure reform well into 2026.

For now, stablecoin rewards have become a high-stakes battleground – not just over yield, but over who controls the future of digital money in the United States.