Bessent Pressures Coinbase as Stablecoin Reward Clash Halts Key Regulation Push
- Bessent says Coinbase blocks the bill, as stablecoin reward limits threaten its revenue base.
- Banks warn stablecoin rewards could speed deposit outflows and weaken core lending funds.
- White House talks stall since both sides refuse to shift on stablecoin yield restrictions.
Washington’s long-running effort to pin down a workable crypto market structure bill hit another snag this week after Scott Bessent singled out a major industry player for slowing the process. His remarks, delivered with little cushioning, sketched a blunt storyline: the CLARITY Act is ready to move, but one company is pushing back hard enough to keep it stuck.
According to reports, he did not name Coinbase outright, though his meaning was unmistakable to anyone following the negotiations. The tension centers on a rule that might look narrow on paper but carries wide implications.
The bill’s current draft takes aim at stablecoin rewards, a revenue stream that has grown into a core piece of Coinbase’s business model. Essentially, USDC’s reserve income generates steady returns, and the exchange shares a slice of that with customers.
Lawmakers have struggled to decide whether those payouts count as simple rewards or prohibited yield. However, the debate has drifted from technical to political, and it now defines the entire bill’s fate.
The Core Dispute: Stablecoin Rewards
Based on reports, Coinbase has argued that it is not resisting oversight or new rules, but resisting this version of them. The company says the bill’s wording would force it to shut down all stablecoin reward programs, even those structured as platform incentives rather than interest-bearing products. That distinction matters.
Passive rewards paid simply for holding a token fall into one category, while incentives tied to activity or platform use fall into another. Regardless, the bill collapses both into the same label, and that is where negotiations have frozen. Banks, meanwhile, see the issue from a different vantage point. Their concern is not blockchain mechanics or token design, but deposits.
To them, reward-bearing stablecoins that reliably offer returns at a time when many savings accounts barely move could accelerate the outflow of deposits. Basically, banks depend on that funding to deliver credit cheaply. As a result, they warned lawmakers that even small shifts in customer behavior could reshape balance sheets across the sector.
Bessent’s Pressure Play
By placing Coinbase at the center of the impasse, Bessent changed the tone of the debate. Instead of a diffuse policy disagreement, the story became a showdown between a single company and a bipartisan effort to close regulatory gaps.
This marks a strategic move, where blame concentrates pressure, and pressure forces movement. If one party appears responsible for slowing a bill that Congress claims it wants to finish, the political cost increases.
The standoff already halted a Senate Banking Committee markup earlier this year after Coinbase withdrew support. Without compromise on stablecoin rewards, committee leaders say they do not have the votes for a clean advance to the Senate floor.
Related: American Fintech Council Backs Fed Payment Account Opening Access for Crypto Firms
White House Attempts to Break the Deadlock
On the other hand, administration officials have held repeated meetings with crypto firms, banking groups, and regulators to carve out a workable middle ground. Some participants pushed for clearer disclosures rather than outright bans.
Yet, bank groups floated a tougher line, urging Congress to prohibit any reward that resembles interest. Crypto executives signaled a willingness to negotiate but not at the expense of eliminating a business model that drives user engagement.
Consequently, those meetings have produced little movement so far. Both sides remain anchored to their red lines, and lawmakers say the bill cannot progress without agreement on this single issue. Everything else, including exchange permissions, market oversight, and stablecoin rules, waits on the outcome.For now, the CLARITY Act stays frozen. Until negotiators decide what counts as a reward, a yield, or something in between, the U.S. regulatory landscape continues to drift without the clarity its authors promised.
