Coinbase goes to war with Wall Street over stablecoin rewards

Coinbase (COIN) launched a marketing campaign push on Monday, calling on U.S. senators to reject Wall Street’s aim to ban rewards or yields on stablecoins offered by crypto companies.

In a post on X, Coinbase argued that if credit card rewards aren’t banned, then crypto rewards shouldn’t be banned either. The company launched a website called nomorebailouts.org as part of its campaign.

“The big banks are coming for another bailout by attacking crypto,” Coinbase wrote. “They don't want you to earn rewards on your stablecoin holdings.”

The “bailout” is a reference to the bailouts given to Wall Street during the 2008-09 financial crisis, which subsequently helped lead to the launch of bitcoin as an alternative to traditional fiat currencies.

But this time the bailout would be in the form of traditional banks trying to stifle competition from crypto companies, according to Coinbase.

The GENIUS Act, which President Trump signed into law this past summer, created the country’s first-ever stablecoin legislation. Since the law prohibits stablecoin issuers from offering interest on the assets, crypto companies are instead offering investors “rewards” on their stablecoin holdings.

Coinbase, for instance, offers its customers 4.10% rewards for holding Circle Internet Group’s (CRCL) USDC stablecoin.

But the banking sector has fought to end this practice of offering rewards, with lobbying groups like the Bank Policy Institute calling it an “interest loophole” that the crypto industry is attempting to use to get around the prohibition in the legislation.

In a separate letter from the American Bankers Association and other lobbying groups, they argue that this “loophole” has allowed affiliates or exchanges like Coinbase to offer interest even if stablecoin issuers themselves are banned from doing so.

Citing a recent report from the Treasury Department, banking lobbyists claim this loophole could drain as much as $6.6 trillion in deposits from the U.S. banking system.

And because the GENIUS Act has already been signed into law, Wall Street is seeking to get rewards banned as part of the crypto legislation that will be set by the CLARITY Act.

“Banks want to ban rewards to maintain their monopoly, and we're making sure the Senate knows bailing out the big banks at the expense of the American consumer is not ok,” Coinbase CEO Brian Armstrong said in a post on X on Monday.

Meanwhile, the Blockchain Association revealed on Monday that it has sent a letter to Congress urging lawmakers to “defend the GENIUS Act,” noting that the legislation passed with bipartisan support.

Coinbase Goes to War With Wall Street Over Stablecoin Rewards“The GENIUS Act is under attack from Big Banks, who want to unravel the law to better protect their businesses, robbing everyday consumers of innovative new products and services,” the organization said on X.