Coinbase once again raises the flag... Conflict with stablecoin "prohibition of interest" intensifies

The Coinbase, a leading U.S. virtual asset exchange, reiterated its opposition to a compromise proposal that includes stablecoin regulation in the CLARITY Act, leading to renewed uncertainty in U.S. virtual asset legislation discussions.

The core dispute revolves around the profit structure of stablecoins. Industry players like Coinbase want to maintain interest and reward structures for users, while the banking sector insists on strict restrictions on such arrangements, and the conflict continues.

“Unacceptable to ban interest”… Coinbase maintains its opposition

It is reported that Coinbase recently conveyed its stance against restrictions on paying interest and rewards based on stablecoin balances through private meetings with senators.

The current proposed compromise design aims to broadly prohibit any direct or indirect benefits from holding stablecoins. This includes interest-based reward structures offered by exchanges or platforms to users, which industry insiders see as potentially limiting existing profit models.

Coinbase has been actively expanding its interest and reward structures generated from USDC reserves, which are considered a significant part of its total revenue.

With reports indicating that CEO Brian Armstrong also opposes these provisions, tensions over support for the bill are intensifying.

Banking sector: “Must be fully banned”… clear stance difference

On the other hand, banking and credit union lobbying groups are pushing for a comprehensive ban on stablecoin interest and rewards as a core requirement.

They argue that widespread use of stablecoins as a substitute for deposits could lead to large-scale capital outflows and call for increased regulation. They believe that restrictions should not only target issuers but also include broad limitations on reward structures conducted through exchanges and third parties.

Initially, the White House proposed a compromise of “banning interest based on balances, with some allowance for activity-based rewards,” but negotiations stalled due to banking opposition. The subsequent draft is considered to align more closely with banking interests.

Industry internal positions also vary

Within the virtual asset industry, opinions are divided.

It is reported that operators heavily reliant on interest and reward structures, like Coinbase, strongly oppose restrictions, while some issuers and platforms are willing to accept certain conditions for regulatory clarity.

Additionally, some operators are adopting a more cautious stance, considering inclusion in the broader financial infrastructure and access to regulated systems. Overall, the industry has not reached a unified position.

Market response: increased stock price volatility

Such regulatory uncertainties have also impacted the market.

As the possibility of restricting stablecoin profit structures becomes more apparent, Coinbase’s stock price has experienced increased short-term volatility, with similar trends seen in related companies.

Some analysts believe that, in the medium term, this issue will continue to exert pressure on valuations.

Legislative outlook uncertain… focus on potential compromises

Policy expectations are also somewhat shaken. Some market opinions suggest a roughly 60% chance of passing a virtual asset bill this year, down from higher previous expectations, indicating a shift in sentiment.

Predictions point out that the intertwining of political schedules and industry opposition makes reaching an agreement in the short term unlikely.

While discussions of a compromise—such as limiting interest based on balances while allowing limited rewards—are possible, whether Coinbase will accept such terms remains uncertain.

Ultimately, the debate stems from fundamental differences in how to define the relationship between stablecoins and the existing financial system, which is expected to be a key factor in determining the future direction of U.S. virtual asset policy.