How Stablecoin Restrictions Could Reshape Coinbase's Earnings

Coinbase’s business model increasingly hinges on stablecoin-related activities, creating a direct conflict with proposed regulations. The exchange has signaled it may reconsider its position on the CLARITY Act if lawmakers restrict how platforms reward stablecoin holders. This brewing dispute reveals the tension between Washington’s desire to regulate digital assets and the economic realities of how crypto platforms generate coin earnings.

The Stablecoin Revenue Engine Behind Coinbase’s Business Model

Coinbase’s financial performance depends significantly on stablecoin incentives. The platform offers rewards on USDC, a stablecoin backed by cash and short-term U.S. Treasuries, encouraging users to maintain substantial balances in their accounts. According to industry estimates, Coinbase earned approximately $1.3 billion from stablecoin-related operations during 2025—a figure that underscores just how critical this revenue stream has become.

The mechanics are straightforward: users deposit stablecoins, earn yields, and remain engaged on the platform. During periods of low trading volatility, these rewards become especially valuable, providing steady income when transaction-based earnings decline. Beyond the direct revenue, stablecoin holdings also increase user lifetime value, as customers who earn rewards tend to deepen their platform usage over time.

Coinbase’s minority stake in Circle, the company behind USDC, amplifies this interest. The exchange’s own profitability is now directly tied to stablecoin yields and the regulatory landscape surrounding them. Any cap on rewards would not only reduce immediate coin earnings but could also weaken Coinbase’s strategic position in the broader stablecoin ecosystem.

CLARITY Act Negotiations: Where Policy Threatens Coin Earnings

The CLARITY Act aims to establish a comprehensive federal framework for digital assets, building on the foundation laid by the GENIUS Act. The previous framework prohibited stablecoin issuers from paying interest directly but permitted third-party platforms—like Coinbase—to distribute rewards. This compromise allowed platforms to maintain a revenue advantage while the issuer avoided regulatory complications.

Now, lawmakers are considering proposals that would restrict rewards exclusively to federally chartered banks or trust institutions. This middle-ground approach reflects pressure from banking groups, who argue that yield-bearing stablecoins could siphon deposits away from traditional financial institutions. Coinbase maintains that eliminating or severely limiting platform-based rewards would undermine the competitive balance established under the GENIUS Act and stifle innovation in digital finance.

The stakes are genuine: if the CLARITY Act passes with tight restrictions on rewards, Coinbase’s coin earnings from stablecoins would face substantial headwinds. User engagement could decline, fewer customers might maintain large stablecoin balances, and the platform’s ability to differentiate itself through yield offerings would diminish. This uncertainty has prompted Coinbase to condition its continued legislative support on preserving meaningful reward mechanisms.

Banking Interests vs Crypto Platform Economics

The core disagreement reflects a fundamental divide between traditional finance and crypto platforms over how stablecoins should be structured. Banks view yield restrictions as essential protection for their deposit base; crypto firms see them as barriers to innovation and fair competition. Some crypto companies have already obtained conditional approvals for national trust bank status, signaling their intent to compete directly in the regulated financial services space.

As the Senate prepares to advance the CLARITY Act, lawmakers must weigh competing interests: banking system stability, user protection, innovation incentives, and fair market access. Coinbase’s potential withdrawal of support could fragment the bipartisan coalition behind the bill, complicating its path forward. The outcome will fundamentally shape how platforms structure incentives, where coin earnings come from, and whether digital asset platforms can maintain economic viability alongside traditional financial institutions.