Quick Breakdown
- Coinbase may withdraw support for the CLARITY Act if stablecoin rewards are restricted
- Banks warn stablecoin yields could drain trillions from traditional finance
- Lawmakers face growing pressure from both crypto advocates and banking lobbyists
US-based crypto exchange Coinbase is stepping up pressure on lawmakers as debate intensifies around the CLARITY Act, a sweeping crypto market structure bill that could reshape how stablecoins and decentralized finance operate in the US.
Coinbase threatens to withdraw support for the CLARITY Act if it restricts stablecoin rewards beyond disclosure requirements, according to Bloomberg. pic.twitter.com/awOtXnR3z9
— sdm | lucius (@lordsambrah) January 12, 2026
According to a Bloomberg report published Sunday, Coinbase may rethink its support for the legislation if it moves to block stablecoin issuers from offering rewards through exchanges and third-party platforms. The report cited a source familiar with the company’s internal position.
At the heart of the dispute is whether stablecoin rewards, often compared to interest-earning products, pose a threat to the traditional banking system. Banking lobby groups argue such incentives could drain trillions of dollars in deposits from banks, while crypto firms say they’re essential to innovation and user adoption.
Banking lobby vs crypto advocates heats up
The debate has spilt beyond Capitol Hill. An anti-DeFi advocacy group has reportedly run advertisements on Fox News, urging viewers to pressure senators to back provisions that would clamp down on DeFi and stablecoin rewards.
Crypto supporters have responded in force. Advocacy group Stand With Crypto says its members have sent more than 135,000 emails to senators, calling for protections for stablecoin rewards and open blockchain infrastructure.
The issue is expected to come to a head this Thursday, when the US Senate Banking Committee holds a markup session to debate the bill’s language.
Stablecoin rewards put billions at stake
The controversy follows the passage of the GENIUS Act in July, which bans stablecoin issuers from directly paying yield to token holders. However, the law does not clearly prohibit exchanges or third parties from offering rewards, a loophole banks now seek to close with the CLARITY Act.
Coinbase, which has applied for a national trust banking charter, could legally offer rewards under current rules if its application is approved. The banking industry is pushing to prevent that outcome.\
Despite the urgency, progress may be slow. TD Cowen’s Washington Research Group warns the CLARITY Act could be delayed until after the 2026 midterm elections, with final implementation potentially stretching to 2029. Senate Banking Committee Chair Tim Scott remains optimistic, saying the bill can move faster and deliver tangible benefits for Americans.
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