Coinbase Threatens to Withdraw Support for CLARITY Act Over Stablecoin Reward Restrictions
In a significant development for cryptocurrency regulation, Coinbase, one of the world's leading digital asset exchanges, has issued a stark warning regarding the upcoming CLARITY Act. The exchange has stated it may withdraw its support for the bipartisan legislation if the U.S. Senate imposes overly restrictive measures on stablecoin rewards that go beyond basic disclosure requirements. This threat comes just days before a critical Senate Banking Committee markup scheduled for January 15, 2026, highlighting the escalating tension between the crypto industry and lawmakers as they attempt to finalize regulatory frameworks. The CLARITY Act, which successfully passed the House of Representatives in July 2025, is a landmark bill designed to clarify the often-blurred jurisdictional lines between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) concerning digital assets. Its primary goal is to establish a clear, predictable regulatory environment to foster innovation while protecting consumers. However, Coinbase's position suggests that certain provisions under consideration in the Senate could undermine this objective by placing what the exchange views as excessive constraints on the functionality and appeal of stablecoins—a cornerstone of the crypto economy. Coinbase's argument centers on the belief that stablecoin rewards programs, which offer users yields or incentives for holding certain dollar-pegged tokens, are essential for user engagement and ecosystem growth. The exchange contends that requiring simple, transparent disclosures about the risks and mechanics of these programs is sufficient and aligns with good consumer protection practices. Imposing stricter limitations, such as caps on rewards or outright bans on certain models, would, in Coinbase's view, cripple a vital aspect of the market, stifle competition, and ultimately harm consumers by limiting choice and innovation. This stance reflects a broader industry concern that well-intentioned regulation could inadvertently suppress the very technological and financial advancements it seeks to govern safely. As the January 15 markup date approaches, all eyes are on the Senate Banking Committee. Coinbase's public warning serves as a powerful lobbying tool, signaling to lawmakers that the support of a major industry player is contingent on a balanced, innovation-friendly final bill. The outcome of this debate will be a critical indicator of the U.S. government's ultimate approach to crypto regulation—whether it chooses a path of collaborative framework-building or one of restrictive oversight that could push key industry activities offshore. The decision will have profound implications for the future of digital asset markets, investor participation, and America's competitive stance in the global financial technology landscape.
Coinbase Threatens to Pull Support for CLARITY Act
Coinbase has issued a stark warning that it may withdraw support for the CLARITY Act if the Senate imposes restrictive measures on stablecoin rewards beyond basic disclosure requirements. The bipartisan bill, which cleared the House in July 2025, is slated for a Senate Banking Committee markup on January 15, 2026, aiming to delineate regulatory boundaries between the SEC and CFTC.
The exchange argues that excessive constraints could cripple innovation, jeopardize $1.3 billion in USDC-related revenue, and undermine the U.S. dollar's competitiveness. This stance puts Coinbase at odds with traditional banks advocating for tighter controls to safeguard community lenders.
Coinbase Threatens Withdrawal of Support for Crypto Bill Over Stablecoin Rewards
The CLARITY Act, a pivotal U.S. crypto market structure bill, faces a Senate Banking Committee markup this week. Central to the debate is whether stablecoin issuers should be prohibited from offering rewards through exchanges like Coinbase. The company has signaled it may oppose the bill if such restrictions are enacted, viewing them as a threat to user choice and its revenue model.
Stablecoin rewards have become a cornerstone of crypto platforms, enabling users to earn yields on assets like USDC without traditional banking. For Coinbase, these programs generated $247 million in Q4 alone, with blockchain rewards adding $154.8 million. A ban could erode both platform revenue and incentives for holding regulated digital dollars.
Community sentiment, particularly on Reddit, skews sharply against traditional banks in this debate. The outcome could set a precedent for how decentralized finance interfaces with regulatory frameworks.
