"For Coinbase, stablecoin rewards are not a minor perk - they are a core part of its revenue model. The exchange shares in interest income generated from reserves backing USD Coin (USDC), the widely used stablecoin issued by Circle, in which Coinbase owns a minority stake. Part of that income is used to offer incentives to users, including roughly 3.5% rewards for Coinbase One customers. These programs encourage users to keep USDC on the platform, creating a predictable revenue stream even when trading activity slows."
"The heart of the debate is whether these rewards resemble traditional banking products, such as interest-bearing accounts, or whether they are consumer incentives that belong in a crypto-specific regulatory framework. Some banking groups argue that allowing yield on stablecoins could pull deposits away from traditional banks, potentially reducing lending to households and small businesses."
Congress will mark up the CLARITY Act on January 15, and the bill could impose restrictions on stablecoin reward programs. Coinbase may withdraw support for the CLARITY Act if the bill restricts these reward programs. Stablecoin rewards form a central part of Coinbase’s revenue by sharing interest income from reserves backing USD Coin (USDC), in which Coinbase holds a minority stake with Circle. Coinbase uses part of that income to fund incentives, including roughly 3.5% rewards for Coinbase One customers. Banking groups warn that yield on stablecoins could pull deposits from traditional banks, while crypto advocates argue that treating rewards like bank interest would stifle innovation and push users offshore.
Read at Bitcoin Magazine
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