The crypto-focused markets structure bill is set to be discussed at a markup session on Thursday. On the line is the ability for stablecoin issuers to offer rewards via crypto exchanges.
US crypto exchange Coinbase is reportedly ramping up pressure on US lawmakers to resist a push to ban certain decentralized finance provisions in a major crypto bill known as the CLARITY Act.
A from Bloomberg on Sunday, citing “a person familiar with the firm’s thinking,” said Coinbase “may reconsider its support” for the bill should it restrict stablecoin issuers from offering rewards on crypto exchanges and other platforms.
Cointelegraph reached out to Coinbase for comment but didn’t receive an immediate response.
Banking groups have been concerned that stablecoin rewards and income-generating products could siphon trillions of dollars from the traditional banking system.
An anti-decentralized finance group was reportedly seen on Fox News, encouraging the public to pressure their local senators into passing crypto market structure legislation to ban the DeFi provisions supposedly threatening the banking industry.
The crypto community has been fighting hard, too, with Stand With Crypto its advocates have sent over 135,000 emails to senators to protect stablecoin rewards.
The US Senate Banking Committee is set to discuss the issue in a session this Thursday.
Passed in July, the GENIUS Act prohibits stablecoin issuers from offering interest or yield to holders of the token; however, it does not explicitly extend the ban to crypto exchanges or third parties — potentially enabling issuers to sidestep the law by offering rewards through partner platforms.
Coinbase has applied for a national trust banking charter, which would formally allow it to offer rewards under those rules, while the banking industry is fighting to close that loophole under the CLARITY Act.
Millions on the line for crypto firms and banks
Stablecoins have become a major revenue driver for Coinbase, bringing in nearly in Q4 in addition to $154.8 million from blockchain rewards.
Banning rewards from products like Circle’s USDC () stablecoin, which lets users earn around 3.5%, could hit Coinbase and other crypto trading platforms hard.
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However, banking industry advocates say allowing stablecoin rewards could hit the industry even harder, with the Treasury Department estimating in April that widespread could from the traditional banking system.
Crypto market structure laws may take time
In addition to the contentious DeFi provisions, there are fears that the may of the CLARITY Act bill, with TD Cowen’s Washington Research Group reporting the bill may not pass Congress until 2027, with final implementation in 2029.
Senate Banking Committee Chair Tim Scott, however, appears that it can be passed much sooner and “deliver real results for the American people.”
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