Coinbase Warns It May Drop Support For CLARITY Act
- Coinbase threatens that it may withdraw its support from the CLARITY Act, if it restricts stablecoin rewards.
- Lawmakers weigh DeFi limits while banks warn of deposit pressure from yields abroad.
- Stablecoin activity hit record levels in 2025 under the GENIUS Act framework law.
As U.S. lawmakers move closer to finalizing the CLARITY Act, Coinbase is warning that it may withdraw its backing if restrictions on DeFi and stablecoin rewards remain. According to a Bloomberg report, the exchange opposes provisions that would curb decentralized finance activity and prohibit stablecoin reward programs.
The warning comes as Congress debates changes that could reshape the economics of the U.S. crypto market. The proposed legislation is now waiting for the Senate markup to take place in early 2026.
CLARITY Act Nears Final Phase as Coinbase Pushes Back
The Digital Asset Market Clarity Act of 2025, commonly known as the CLARITY Act, seeks to establish federal oversight for crypto trading platforms and intermediaries. The U.S. House passed the bill with bipartisan support. Lawmakers designed it to define regulatory roles across digital asset markets.
As the bill advances, Coinbase has urged lawmakers to oppose provisions targeting DeFi functionality. People familiar with the discussions said the exchange “may reconsider its support” if those limits remain. Bloomberg reports that the company argues that restrictions could weaken DeFi activity within U.S. markets.
The reported warning reflects growing tension as the bill enters its final legislative phase. Coinbase views the proposed changes as a threat to innovation. The company has not withdrawn support yet. Still, the message signals rising pressure on lawmakers as negotiations continue.
Stablecoin Rewards Become Central Point of Dispute
Stablecoins received earlier regulatory treatment under the GENIUS Act, which became law in July 2025. That framework requires full backing with high-quality liquid assets. It also introduced transparency and reserve standards for issuers such as USDC.
The GENIUS Act did not restrict reward programs offered by platforms holding stablecoins. As a result, stablecoin incentives expanded rapidly across crypto platforms. Coinbase now warns that banning these rewards under the CLARITY Act would damage innovation.
Stablecoin usage has surged. CryptoTale recently reported that transactions reached a record $33 trillion in 2025. USDC accounted for a large share of that volume. Growth coincided with pro-crypto policies under the Donald Trump administration, including support for stablecoin legislation.
Related: Coinbase Urges Treasury to Stay True to GENIUS Act Goals
Banks Flag Deposit Risk as Regulators Weigh Impact
Traditional banks have raised concerns about stablecoin rewards. U.S. banks generate about $360 billion each year from deposits and card fees. Banking groups warn that crypto incentives could erode these revenue streams.
From their perspective, stablecoin yields compete directly with bank deposits. Banks rely on deposits as low-cost funding for lending. Higher yields on dollar-pegged crypto assets could shift capital away from traditional accounts.
The Federal Reserve has documented similar risks. Research shows that rising stablecoin adoption can displace bank deposits. The Fed also noted potential changes to bank liquidity and funding structures tied to digital assets.
As debate continues, Coinbase maintains that stablecoin economics remain inseparable from regulatory outcomes. Lawmakers now face a narrowing window to decide how far U.S. crypto regulation should go without altering the competitive balance between digital finance and traditional banking.
