Coinbase signaled it could withdraw backing for the CLARITY Act after lawmakers debated a provision that would ban rewards on stablecoins, a move the exchange says would cut a key revenue stream and reshape its regulatory stance.
Coinbase drew a legal and commercial distinction between stablecoin issuers and platforms that hold or custody those tokens. The exchange contends that issuer prohibitions in the broader stablecoin package do not—and should not—prevent non‑issuers from offering loyalty or reward programs tied to stablecoins.
CEO Brian Armstrong described a blanket ban as a “red line” for the company, signaling readiness to withdraw legislative support if language is not adjusted.
The company also quantified the economic stakes: the disputed rewards business generates an estimated $1.3B in annual revenue for Coinbase, according to the reporting embedded in the company’s public position.
Banks and legacy institutions have lobbied to close the gap between bank interest and crypto rewards, arguing the latter can erode deposit bases; Coinbase pushes back, framing rewards as competitive consumer choice rather than traditional deposit interest.
Market and legislative implications
Withdrawal of Coinbase’s support would complicate an already delicate bipartisan effort to clarify U.S. crypto regulation. The CLARITY Act aims to delineate authority between market regulators, but the stablecoin rewards dispute has become a central sticking point that could shift the debate from jurisdictional clarity to commercial viability of crypto business models.
Eliminating rewards would put roughly $1.3B in annual revenue at risk for Coinbase and require retooling of product incentives and customer acquisition strategies.
Coinbase argued the policy choice was not merely technical but foundational for how crypto firms access and retain customers, while opponents framed rewards as functionally equivalent to regulated bank interest.
Investors, product teams and compliance officers will now watch the Senate markup scheduled for 2026-01-15 closely; that session will test whether lawmakers can reconcile commercial incentives with the regulatory guardrails Congress seeks to impose.
The outcome will shape where trading and custody products can operate, how platforms monetize stablecoins, and how quickly market participants adjust roadmaps and compliance programs.
