Coinbase May Withdraw Support for CLARITY Act

Coinbase is evaluating its position regarding the CLARITY Act as the Senate prepares to mark up the legislation. The exchange has indicated it may withdraw support if the final text imposes restrictions on stablecoin reward programs. These programs are a core component of Coinbase's revenue model, allowing the exchange to share interest income generated from USD Coin (USDC) reserves with its users.

The debate highlights a significant divide between traditional banking interests and the crypto industry. While banking groups argue that stablecoin yields threaten traditional deposits, Coinbase contends that limiting these rewards would make U.S. platforms less competitive globally. The outcome of the January 15 markup session could determine the regulatory landscape for digital assets and the future of yield-bearing products on U.S. exchanges.

The potential withdrawal of support stems from the financial importance of stablecoin rewards to Coinbase's business operations. The exchange participates in interest income derived from the reserves backing USD Coin (USDC), a stablecoin issued by Circle. Coinbase holds a minority stake in Circle, further solidifying this relationship.

Part of the revenue generated from these reserves is utilized to offer incentives to users. Specifically, the exchange provides approximately 3.5% rewards for customers subscribed to Coinbase One. These incentives serve a strategic purpose:

• Encouraging users to maintain USDC balances on the platform.
• Creating a predictable revenue stream during periods of low trading volume.
• Competing with traditional financial products offering interest.

These programs are not viewed as a minor perk by the exchange. Instead, they are integral to the company's financial health. Estimates suggest that revenue related to stablecoins may have reached around $1.3 billion in 2025. Consequently, legislative restrictions on these programs pose a direct threat to the exchange's profitability.

The core of the conflict lies in the classification of stablecoin rewards. The CLARITY Act aims to establish market structure rules for digital assets, defining categories such as digital commodities and payment stablecoins. However, the legislation also signals increased Congress interest in stablecoin oversight.

Traditional banking groups have raised concerns regarding these crypto-native incentives. Their argument rests on the premise that allowing yield on stablecoins could:

• Pull deposits away from traditional banks.
• Reduce lending capacity to households and small businesses.
• Blur the lines between regulated banking products and unregulated crypto assets.

In contrast, Coinbase and other crypto advocates argue that treating rewards as bank interest would have negative consequences. They claim it would stifle innovation and make U.S.-based platforms less competitive against international counterparts. There is a fear that overly restrictive regulations could push users to seek services offshore, outside of U.S. regulatory reach. This tension represents the broader struggle between ensuring investor protection and maintaining viable business models for companies in the emerging sector.

The timing of this dispute is critical. The Senate Banking Committee is scheduled to review the bill shortly, with a markup session set for January 15. The provisions finalized during this process could shape the future of U.S. crypto policy for years to come.

Coinbase's potential withdrawal of support serves as both a negotiation tactic and a reflection of the critical nature of stablecoin yield programs. If the bill passes with strict limitations, the impact could be twofold:

1. Reduced Adoption: Limiting incentives may reduce the adoption of U.S.-based platforms, slowing mainstream engagement with digital currencies.
2. Global Competitiveness: U.S. exchanges may struggle to compete with platforms in other jurisdictions that permit yield-bearing products.

While Coinbase has not issued an official statement regarding its final decision, reports indicate that the exchange is carefully evaluating the text. The goal is to determine if it can continue offering rewards while remaining compliant with U.S. law. The outcome of the markup session will likely dictate whether Coinbase proceeds with its threat to withdraw support.

The conflict between Coinbase and lawmakers over the CLARITY Act underscores the growing pains of the digital asset industry. As Congress moves to clarify market structures, the inclusion of stablecoin oversight creates friction with established business models. The exchange's reliance on stablecoin rewards highlights how deeply integrated these products are into the current crypto ecosystem.

As the January 15 markup approaches, all eyes are on the Senate Banking Committee. The decisions made in the coming days will not only determine the fate of the CLARITY Act but also set a precedent for how the United States approaches the regulation of stablecoins and the broader crypto economy. The balance between innovation, consumer protection, and financial stability remains the central challenge facing all stakeholders involved.