Coinbase may reconsider backing the U.S. crypto market structure bill, as per Bloomberg, if it restricts stablecoin rewards, crucial for its USDC yield offerings.
The move highlights Coinbase’s strategy to influence regulation and protect revenue, potentially impacting U.S. crypto policy direction and market stability.
Coinbase is lobbying against restrictions on stablecoin rewards in a pending US crypto market bill. The company may withdraw support if such provisions are included, signaling the importance of unrestricted USDC yield for their business model.
Coinbase Global, Inc. aims to preserve its ability to offer USDC reward programs. Key figures involved include CEO Brian Armstrong and US Congress, particularly with the digital-asset market-structure bill addressing stablecoins and DeFi regulations. Brian Armstrong, CEO, Coinbase, remarked, “We will withdraw support for the CLARITY Act if it bans stablecoin rewards.” source
USDC Revenue at Risk if Bill Passes
Should restrictions be enacted, Coinbase’s revenue from USDC rewards could suffer, impacting both the platform’s attractiveness and user base. The bill’s implications extend beyond Coinbase, suggesting potential shifts in USDC use within the market.
Economic outcomes may include decreased attractiveness for USDC on Coinbase and a potential reduction in interest income. Historical data shows interest income on USDC has been significant during times of low trading volume, offering a stable revenue source. Coinbase spokesperson remarked, “The ability to offer USDC rewards is crucial for our customers, and we are committed to ensuring any regulatory framework supports innovation rather than stifles it.”
Regulatory Pressures Could Shift Capital Offshore
Similar regulatory pressures have impacted yield-bearing crypto products before, often resulting in decreased US participation. These events have historically pushed capital toward DeFi or non-US platforms, highlighting potential shifts in capital flows.
Experts suggest that restricting platform-based stablecoin rewards may drive liquidity towards DeFi solutions or non-US entities. Historical trends indicate that regulations, while often intended to stabilize, can inadvertently lead to competitive disadvantages for domestic exchanges.
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