Key Highlights
- Coinbase has once again rejected the CLARITY Act, citing concerns over strict restrictions on stablecoin yield provisions.
- The proposed bill would ban crypto platforms from offering any form of yield on stablecoin balances, directly or indirectly.
- Lawmakers are now pushing for a bipartisan compromise as the debate between protecting bank deposits and enabling crypto rewards intensifies.
Coinbase, the largest cryptocurrency exchange in the United States, has told Senate offices this week that it cannot support the latest version of the Digital Asset Market Clarity Act (known as CLARITY Act), according to a Punchbowl News report published on Wednesday, citing four sources familiar with the matter.
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The exchange raised “significant concerns” about the revised stablecoin yield language in the bill. The provisions in question were led by Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD), who have been at the center of negotiations between crypto firms and banks for months.
The bipartisan proposal, which was circulated to stakeholders on Monday, would prevent crypto exchanges from paying rewards on stablecoin balances. It would also further limit incentive structures by restricting access to transaction-size data, which platforms currently use to calculate user rewards.
The draft bans yield offerings “directly or indirectly” and bars any incentive that is “economically equivalent” to bank interest.
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However, the text does leave room for limited activity-based rewards such as loyalty programs, promotions, and subscription-based benefits, provided they do not resemble interest-bearing deposit accounts. The U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the U.S. Department of the Treasury would be given 12 months to jointly define what qualifies as a permissible reward and to set anti-evasion rules.
Not the first time
This is not the first time Coinbase has pushed back on the CLARITY Act over the same issue. In January 2026, CEO Brian Armstrong publicly withdrew support for the bill on the eve of a Senate Banking Committee markup, calling the stablecoin yield restrictions a move to protect bank profits at the expense of American consumers.
Armstrong had posted on X at the time, saying the bill was “materially worse than the current status quo” and that Coinbase would “rather have no bill than a bad bill.” That move single-handedly caused the Senate Banking Committee to postpone its markup, throwing the bill into months of uncertainty.
In February, Armstrong signaled a shift in tone. He described follow-up conversations at the White House as constructive and indicated Coinbase was working toward a deal. The company stopped actively opposing the bill during that period, but never formally re-endorsed it.
The latest rejection suggests the compromise text that emerged from weeks of closed-door meetings at the White House and on Capitol Hill did not go far enough to address Coinbase’s concerns.
Why it matters for Coinbase
The financial stakes for Coinbase are significant. The company reported $1.35 billion in stablecoin revenue in 2025. Much of that came from distribution payments tied to its partnership with Circle, the issuer behind USDC, the second-largest dollar-pegged stablecoin.
Stablecoin-related revenue represented roughly 20% of Coinbase’s total revenue in the third quarter of 2025. Coinbase has a distribution agreement with Circle under which it receives nearly all of the interest income generated by USDC reserves held on its platform. Any provision that restricts the company’s ability to offer rewards on USDC balances could directly cut into one of its highest-margin revenue streams.
Coinbase’s stock, which trades under the ticker COIN on Nasdaq, closed at $181.10 on Wednesday, down nearly 5% from its opening price above $190. The stock has fallen about 7.4% over the past five days and roughly 41% over the past six months. Shares of Circle have also dropped sharply in recent sessions, with Mizuho analysts pointing to the legislative uncertainty around the CLARITY Act as a primary factor.
Banks vs Crypto: The core of the fight
The stablecoin yield debate has been the single biggest obstacle to the CLARITY Act’s progress since early 2026.
Banks have long argued that yield programs on stablecoins function too much like unregulated deposit accounts and could trigger a wave of deposit flight from the traditional banking system. Standard Chartered analysts have estimated that a stablecoin yield provision, if enacted, could redirect up to $500 billion in deposits from traditional banks toward stablecoin products by 2028.
On the other side, the crypto industry has argued that stablecoin rewards expand financial options for consumers and that restricting them amounts to protecting bank monopolies from competition.
Coinbase’s position has been that its USDC rewards program is not a deposit product. Armstrong has described it as revenue sharing from the interest earned on Treasury bills held in USDC’s reserve, which he says is fundamentally different from a savings account paying interest.
Despite multiple White House-led meetings aimed at bridging the gap between the two sides, no lasting agreement has been reached.
Mixed reactions from the industry
Not everyone in the crypto space shares Coinbase’s opposition to the latest text. One trade group leader, who was not named in reports, described the provisions as “largely in line with expectations” and said they struck an acceptable balance by preserving transaction-based incentives while drawing a clear line against interest-like stablecoin offerings. That source expressed confidence that “people will still get their rewards.”
The split mirrors the divide that emerged in January when Armstrong first pulled Coinbase’s support. At the time, prominent industry figures, including a16z crypto head Chris Dixon and the White House’s own crypto advisor Patrick Witt, publicly disagreed with Armstrong’s stance and urged the industry to push the bill forward rather than hold it up over a single provision.
What happens next
Discussions on the stablecoin yield language are ongoing, according to the Punchbowl News report. Senator Cynthia Lummis (R-WY) wrote on X on Wednesday that “bipartisan compromise is necessary for the CLARITY Act to pass” and that her team is “working around the clock to ensure stablecoin rewards are protected and to prevent deposit flight from community banks.”
Patrick Witt, the executive director of the President’s Council of Advisors for Digital Assets, sought to calm fears, noting there is “plenty of uninformed FUD” circulating on social media this week. He added that “it’s all going to work out.”
The Senate Banking Committee is targeting a markup in the second half of April, according to Lummis. But the timeline is tight. Industry analysts, including Galaxy Research Head Alex Thorn, have warned that if the bill does not reach the Senate floor by early May, it is unlikely to pass in 2026 due to the approaching midterm election cycle. Senator Bernie Moreno has said explicitly that if the bill does not advance by May, digital asset legislation may not move again until 2027.
For now, the ball is back in the hands of lawmakers and lobbyists. Whether Coinbase’s latest rejection delays the bill further or forces a new round of compromise remains to be seen.
Also Read: SEC’s Atkins Says Crypto Clarity Push Marks ‘End of the Beginning’
