Coinbase’s Faryar Shirzad warns banning stablecoin rewards as a part of the Readability Act would drive issuers offshore, and hand the greenback’s digital future to rival jurisdictions
The battle over stablecoin rewards has grow to be one of many major obstacles to advancing the Digital Asset Market Readability Act by the US Senate. Banking lobbyists have pushed for an outright ban on all types of yield, arguing that reward programmes operate as deposit substitutes that draw capital away from the banking system.
Their argument has stalled the invoice to date, and with the Senate’s working calendar successfully closing on the finish of July forward of midterm campaigning, the window for passing the CLARITY Act is changing into narrower.
Into that standoff, Faryar Shirzad, Coinbase‘s Chief Coverage Officer, has mentioned stablecoin rewards might go so far as to find out whether or not or not a dollar-denominated stablecoin ecosystem even takes root.
“[There are] numerous questions on why rewards matter and why we have to preserve the competitiveness of GENIUS stablecoins,” Shirzad wrote on X.
“The reply is that you just don’t need to situation a US greenback stablecoin within the US. Hong Kong, Singapore, UAE, Bermuda and others have constructed licensing regimes particularly to draw USD stablecoin issuers — the roles, the reserves, the infrastructure, the greenback rails and the governmental oversight.
“Rewards are crucial to make US-regulated stablecoins aggressive with offshore options. Strip them from GENIUS, and also you’re undermining demand for the very product Congress is attempting to advertise and convey on-shore.”
Behind the Readability Act rift
Signed into US regulation in July 2025, one of many GENIUS Act’s preliminary tenants was to ban permitted stablecoin issuers from paying curiosity or yield on to holders.
Nevertheless, what it left unresolved was whether or not the prohibition prolonged to third-party buying and selling platforms like Coinbase, which gives its personal rewards programmes on stablecoins issued by others.
Crypto-trading platforms acted on the idea that it didn’t, regardless of the views of the banking trade. In January 2026, the Senate Banking Committee‘s preliminary draft of the Readability Act mirrored a compromise, the place digital asset service suppliers can be barred from paying yield on static holdings however permitted to supply activity-based rewards tied to transactions, pockets use, or ecosystem participation.
Banking representatives remained against this, although, and arrived at a White Home assembly in February with a ideas doc calling for a near-total ban on stablecoin yield. They haven’t but moved from that place.
The crypto trade’s negotiating place was additional difficult in late February when the Workplace of the Comptroller of the Forex (OCC) revealed proposed rulemaking implementing the GENIUS Act, introducing a rebuttable presumption that affiliate and third-party yield preparations might violate the spirit of the regulation, casting doubt on whether or not even the prevailing framework protects Coinbase’s rewards programmes.
As of 10 March 2026, senators have been nonetheless working towards a stablecoin yield compromise with a Senate Banking Committee markup probably scheduled for mid-to-late March 2026.
The significance of stablecoin-related income is essential for Coinbase, it represented shut to twenty% of Coinbase’s complete income within the third quarter of 2025, and helped it climate an in any other case risky crypto market. Regulatory enforcement on its rewards programme, might, understandably have an effect on future stablecoin-related income.
Analysis revealed in January 2026 for ProMarket by David Krause, Emeritus Affiliate Professor of Finance within the School of Enterprise Administration at Marquette College, discovered that Coinbase’s USDC reward charges exhibit a 98.7% correlation with three-month Treasury invoice yields, which means rewards operate as a near-direct pass-through of returns on sovereign debt, not a promotional add-on.
The offshore various shouldn’t be hypothetical
The financial logic outlined by Krause is maybe why Shirzad argues that stripping rewards from US-regulated stablecoins makes them much less enticing than offshore options, and in doing so, the Senate could possibly be risking pushing the stablecoin issuance infrastructure – the reserves, the roles, the regulatory oversight – out of American fingers completely.
Hong Kong, Singapore and the UAE have every moved aggressively to draw stablecoin issuers, constructing licensing regimes that supply regulatory readability, reserve frameworks and industrial infrastructure for USD stablecoin exercise.
It needs to be famous the competitors shouldn’t be predicated on being extra permissive on rewards – Hong Kong’s Stablecoins Ordinance, as an example, explicitly prohibits licensed issuers from paying curiosity or yield to holders, mirroring the GENIUS Act’s personal restrictions.
Shirzad’s level is maybe broader, that if US-regulated stablecoins are made much less commercially enticing by a blanket ban on third-party rewards, issuers have an incentive to include in jurisdictions the place the general regulatory surroundings is extra welcoming – taking the reserves, the infrastructure and the oversight with them.
He says: “Greenback dominance isn’t nearly who makes use of the greenback. It’s about who points and controls it. The Senate shouldn’t shackle US-regulated stablecoins whereas the remainder of the world rolls out the welcome mat.”
Nevertheless, it’s value noting the banking foyer’s counter-position rests on numbers which can be arduous to dismiss. A US Treasury Division advisory council has estimated the US transactional deposit market at $6.6tn, with Citigroup projecting stablecoin balances might attain between $1.9tn and $4tn by 2030.
Banks regard that trajectory as an existential menace to their deposit base, and sufficient senators on either side of the aisle have discovered that argument persuasive to maintain the Readability Act stalled.
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