Crypto exchange Coinbase has sharply criticized a group of major US banking associations after they urged federal regulators to ban merchant rewards, cashbacks, and discounts offered to customers who pay with stablecoins.
The latter argued such perks amount to “indirect interest.”
“Unamerican” Power Grab
In a post on X, Coinbase chief policy officer Faryar Shirzad called the proposal “unamerican” and warned that it represents an overreach that would stifle competition and block consumers from using their own money as they choose. The dispute centers on how regulators should implement the GENIUS Act, a federal law passed in July 2025 that prohibits stablecoin issuers, but only issuers, from paying interest or yield to holders.
Banking groups are now pressuring regulators to reinterpret that rule to also prohibit third-party benefits offered by businesses that merely accept stablecoins.
According to Coinbase’s policy arm, the Coinbase Institute, the banks’ interpretation goes against what Congress intended. The law only bans stablecoin issuers from paying interest and makes no mention of affiliates, partners, or any kind of “indirect” interest. The CBI paper says regulators can police issuers, but they cannot control the independent choices of merchants, employers, fintechs, or property owners.
It warns that the banking lobby’s proposal could have sweeping and unpredictable consequences, including banning ordinary practices like merchant discounts for stablecoin payments, employer-funded payroll perks, or property owners paying interest on tenant deposits, simply because those businesses also use an issuer’s API or have a basic relationship with them.
Coinbase added that the real goal is to protect banks’ payment-fee profits, and noted that US merchants paid more than $180 billion in card fees last year. The exchange says adopting the banks’ approach would slow stablecoin adoption, preserve the current fee-heavy system, and block innovations that could lower costs for consumers and merchants.
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“A durable GENIUS Act rule should stick to the statutory text: issuers may not pay interest or yield to stablecoin holders for holding or using the token. The notion of an “indirect” prohibition is an attempt to stifle stablecoin demand and thereby protect payments profits, and there is something unamerican about bank lobbyists pressing regulators to tell stablecoin customers what they can and cannot do with their own money after it is issued. Common sense should prevail.”
Stablecoins Could Go 10x by 2030
US Treasury Secretary Scott Bessent said the stablecoin market, now worth roughly $315 billion, could expand tenfold by the end of the decade, thanks to the GENIUS Act. Speaking at the Treasury Market Conference, Bessent revealed how the Treasury is rethinking long-term borrowing as the country’s debt load grows, and stated that both money-market funds and stablecoins are expected to play a bigger role in future demand for US debt.
His remarks mark the first time a Treasury Secretary has publicly framed stablecoins as a potential pillar of federal financing. A surge in stablecoin adoption would also benefit centralized exchanges such as Coinbase, which stand to gain from increased trading activity.