Coinbase (COIN) Stock; Slides 7% on Congressional Pressure Over USDC

TLDRs;

• Coinbase stock fell nearly 7% amid congressional scrutiny over USDC interest payments.
• Stablecoin revenue made up 19% of Coinbase’s 2025 total, now under regulatory threat.
• Banks push for tighter stablecoin yield limits to protect traditional deposit systems.
• Analysts remain cautiously optimistic despite volatility and legislative uncertainty.

Coinbase Global Inc. (COIN) experienced a nearly 7% decline in stock value as the company ramps up lobbying efforts in Washington, aiming to safeguard its growing stablecoin revenue. The decline comes amid concerns that new legislation could restrict interest and rewards paid on USDC, the stablecoin issued by Circle Internet Group.

In 2025, Coinbase’s stablecoin revenue grew by 48%, largely from interest earned on USDC balances, and accounted for roughly 19% of the company’s total income. However, activity slowed in late 2025 as trading volumes declined, adding pressure on the exchange to maintain its revenue stream.

GENIUS Act Sparks Legal Debate

The recent decline in Coinbase shares is closely tied to interpretations of the GENIUS Act, signed into law in July 2025. While the law bars stablecoin issuers from offering yields on payment-focused coins, ambiguity remains over whether crypto exchanges like Coinbase can continue paying interest to users.

Coinbase Global, Inc., COIN

Banks and traditional financial institutions argue that any yield payments by crypto platforms could destabilize the financial system and mimic unprotected savings accounts, creating a potential risk of deposit outflows. In response, Coinbase CEO Brian Armstrong has publicly supported a compromise approach, seeking a balanced resolution that would preserve consumer benefits without violating the law.

Draft legislation currently under discussion could impose stricter limits on stablecoin rewards, potentially affecting Coinbase’s revenue-sharing agreement with Circle. Lawmakers’ final decisions are expected to shape the broader trajectory of crypto-fintech competition.

Impact on Competition with Banks

The regulatory debate is more than a revenue issue, it could redefine the competitive landscape between traditional banks and crypto platforms. If stablecoin issuers are allowed to continue offering yields, crypto exchanges could rival traditional banks’ savings accounts, pressuring banks to innovate and adapt. Conversely, a broad prohibition on stablecoin rewards would reinforce the conventional deposit-based lending model, limiting competitive pressure from fintech firms.

Industry analysts note that how these rules are applied may also influence the willingness of consumers to use stablecoins as everyday payment instruments versus higher-yield financial tools. For Coinbase, this means balancing shareholder expectations with regulatory compliance and long-term strategic positioning.

Analysts Maintain Cautious Optimism

Despite the recent 7% slide, market observers remain generally optimistic about Coinbase’s long-term prospects. While short-term volatility is amplified by legislative uncertainty, the company continues to benefit from its large user base and diversified revenue streams.

“Regulatory clarity is the key,” said one analyst. “Once lawmakers finalize rules, Coinbase could regain investor confidence if its stablecoin operations remain viable.”

For now, investors are closely monitoring Congress’ next moves, as the outcome will not only affect Coinbase’s revenue but could also set a precedent for other crypto exchanges navigating the intersection of fintech innovation and regulatory oversight.

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