Coinbase's $1.3B Annual Earnings at Risk as CLARITY Act Debate Threatens Stablecoin Reward Model

Coinbase faces a critical moment as lawmakers push to restrict stablecoin rewards—the very mechanism that generates over $1.3 billion in annual earnings for the platform. The U.S. Senate is set to markup the CLARITY Act this week, and Coinbase has signaled it may withdraw support if the legislation limits how platforms can incentivize stablecoin holdings.

The Revenue Engine Under Fire

Stablecoin rewards have become central to Coinbase’s business model. The exchange primarily offers yields on USDC, which is backed by cash and Treasury securities. For users, these incentives encourage them to park assets on the platform; for Coinbase, they represent a steady revenue stream estimated at over $1.3 billion for 2025. This coin earnings mechanism is particularly valuable during periods of low trading activity, providing consistent income regardless of market volatility.

Coinbase’s minority stake in Circle, the company behind USDC, further deepens its financial interest in maintaining robust stablecoin yields. Any restrictions on rewards could directly impact both user retention and platform profitability, making this legislative fight existential for the exchange’s revenue model.

Where the Political Divide Lies

The CLARITY Act builds on the GENIUS Act, which previously established federal stablecoin rules but prohibited issuers from paying interest directly. Instead, it allowed third-party platforms like Coinbase to offer rewards—a compromise the exchange now argues must be preserved.

However, traditional banking groups are pushing back hard. They contend that yield-bearing stablecoins compete directly with bank deposits, threatening their deposit base. Some Senate proposals would restrict rewards exclusively to chartered banks and trust institutions, effectively cutting off platform-based incentives.

Crypto firms and banking institutions are now openly divided over these provisions. While some crypto companies have already secured conditional approvals for national trust bank status, most platforms lack this regulatory moat. For Coinbase, losing the ability to offer competitive rewards would undermine user engagement and force a restructuring of its business.

What’s At Stake

Coinbase’s potential withdrawal of support could fracture the fragile bipartisan consensus around the CLARITY Act. The bill represents the most comprehensive digital-asset framework the U.S. has attempted, and losing the endorsement of a major regulated exchange signals deeper disagreements about innovation versus consumer protection.

Congress must now reconcile competing interests: crypto platforms want flexibility to innovate and compete, banks want protection from non-traditional competition, and regulators want systemic safeguards. The outcome will reshape how exchanges structure incentives and how stablecoins function in the U.S. financial system.

As Senate markups begin, the CLARITY Act’s fate remains uncertain. Whether lawmakers prioritize innovation or banking stability could determine not just Coinbase’s earnings model, but the entire architecture of digital finance in America.