In recent months, discussions surrounding the regulatory landscape for digital assets have intensified, particularly concerning stablecoins. This has been evident as various lawmakers strive to create a framework that is acceptable to all stakeholders involved.
Currently, the revised language in the Digital Asset Market Clarity Act reflects a compromise aimed at balancing innovation and regulation. However, some major players in the crypto exchange arena have yet to endorse this proposed legislation despite its revisions.
Challenges in the Legislative Process
On March 20, Senators Thom Tillis and Angela Alsobrooks introduced updated provisions, which received favorable feedback from the White House. The new terms outright ban rewards for merely holding stablecoins but open the door for rewards linked to specific activities, such as transactions or platform engagement.
While banks may have achieved several of their regulatory goals, the definitions surrounding what constitutes activity-based rewards remain unclear, as reported by industry insiders. This ambiguity is raising concerns among crypto advocates about the future of stablecoin yields.
The proposed legislation includes a stipulation that forces the SEC, CFTC, and Treasury to clarify these definitions within a year. This timeline, however, leaves many in the industry feeling uncertain about immediate regulatory conditions.
Insiders who attended recent briefings on Capitol Hill expressed disappointment, suggesting that the latest draft has overly restrictive measures that could stifle growth in the crypto sector.
Significance of the Legislation for Coinbase
Coinbase, one of the largest cryptocurrency exchanges, stands to be significantly affected by the proposed rules. Data indicate that revenues tied to stablecoins accounted for about 20% of Coinbase’s earnings during the third quarter of 2025.
In that same year, reports suggest that the exchange generated approximately $1.35 billion from stablecoin activities, primarily through collaborations with Circle on USDC.
CEO Brian Armstrong has publicly argued that rewards associated with USDC should not be classified as deposit products. Instead, he maintains that these incentives stem from profit-sharing linked to interest accrued on Treasury securities stored as reserves.
Meanwhile, Treasury Secretary Scott Bessent has voiced concerns about compliance within the sector, urging for a quick Senate vote on the matter. The growing consensus between banks, crypto firms, and government bodies appears to sideline Coinbase’s stance.
A Fragile Legislative Timeline
Though progress on the bill has been made, it still encounters several legislative challenges. Gaining approval from the full Senate will require significant bipartisan support, with a threshold of 60 votes needed. Moreover, a reconciliation process with the House version from July 2025 must also occur.
Senator Bernie Moreno has openly stated that if the bill fails to reach the Senate by May, all potential for crypto legislation may dissolve until post-midterm elections.
Amid these developments, the stablecoin market remains robust, valued at approximately $316 billion. The urgency for a resolution is palpable, but Coinbase has firmly communicated its reservations regarding the current legislative pathways.
Image credit: Quakers and Business, chart courtesy of TradingView
