Coinbase Rejects Updated Clarity Act Over Stablecoin Yield Rules

Coinbase opposes new Clarity Act rules on stablecoin rewards, warning limits may hurt crypto growth, banking competition, and market innovation in United States.

Coinbase has again opposed the updated Clarity Act during ongoing talks in the United States Senate. The disagreement is mainly around rules regarding stablecoin rewards. According to a report by Punchbowl News, the company told lawmakers that it can’t support the current bill language yet.

Senate Debate Grows Over Stablecoin Reward Limits

The Clarity Act is intended to establish clear rules on cryptocurrency markets in the United States. But the draft, as it stands, does include limits on rewards paid to stablecoin holders. Stablecoins are digital tokens that are pegged to the U.S. dollar. Therefore, they are frequently used in the same way as digital cash is used in trading and payments.

Related Reading: US Stablecoin Rules Deal Moves CLARITY Act Closer to Approval | Live Bitcoin News

Lawmakers included the rule after banks expressed their concerns about competition from crypto companies. According to senators Thom Tillis and Angela Alsobrooks, the compromise attempts to preserve the banks while still being innovative. However, talks are continuing in the Senate.

Banks have been arguing for years that the high rewards on stablecoins could suck the money out of savings accounts. As a result, fewer deposits could mean that banks can lend less to businesses and families. Because of this risk, banking groups requested that lawmakers limit interest-like payments on the digital dollars.

Crypto companies do not agree with this opinion at all. Coinbase said the rule may stifle innovation and lead to unfair advantages for banks. The company believes that people should receive better returns on digital money. Earlier, CEO Brian Armstrong said Americans should be free to make more money without the restraints that protect traditional banks.

Market Reaction Shows Investor Concern

The disagreement has already had an impact on financial markets. After news of the reward restrictions, shares of Coinbase dipped about 10 percent in a single day. At the same time, shares of Circle fell almost 20 per cent. Investors were concerned that limits on rewards would lead to lower company revenue.

The current draft of the bill does provide for some smaller rewards associated with activity or loyalty programs. However, it may prevent large interest-style payments offered by many exchanges today. Because of this difference, according to the crypto industry, the rule could slow down growth in the digital finance industry.

Lawmakers are expected to take another look at the bill after the Easter break in April 2026. The Senate Banking Committee is holding a markup session to make final decisions. Therefore, the next few weeks could make or break crypto rules in the United States.

Coinbase also has significant political clout in Washington. The company backs Fairshake, a political group that financially supports candidates who are crypto-friendly. Because Congress is divided, whether the bill may pass is based on the support of large companies.

For now, the Clarity Act is incomplete. However, the debate illustrates how challenging it can be to strike a balance between innovation and banking safety. As talks continue, the final rules could have implications for the future of stablecoins and digital payments and the broader crypto market.

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