Coinbase Fights Bank Push to Ban Stablecoin Rewards—What’s at Stake?

Coinbase opposes banking groups' push to ban stablecoin merchant rewards, arguing it exceeds the GENIUS Act and stifles innovation. The dispute centers on whether third-party rewards should be restricted, impacting payment innovation.

Coinbase is strongly opposing efforts by U.S. banking groups to ban merchant rewards, cashbacks, and discounts tied to stablecoin payments, arguing that such a move exceeds the intent of the GENIUS Act and stifles innovation. The GENIUS Act prohibits stablecoin issuers from paying interest or yield to token holders but does not explicitly ban third-party rewards from merchants or exchanges. Banking groups claim these rewards constitute "indirect interest" and want regulators to extend the prohibition, citing concerns over deposit outflows and threats to traditional payment systems. Coinbase counters that the law only applies to issuers and that expanding the ban would harm consumers, limit payment innovation, and protect entrenched financial interests. The dispute highlights the growing tension between traditional banks and the emerging stablecoin sector, with significant implications for payment costs, consumer choice, and the future of digital finance in the U.S.