Coinbase opposes new language in the Senate's crypto bill that would limit stablecoin yield payments, citing potential risks to their business.
Crypto exchange Coinbase has expressed opposition to the latest version of the Senate's crypto market structure bill, specifically targeting provisions on stablecoin yields. In a meeting with Senate lawmakers on Monday, Coinbase representatives highlighted concerns about language that would prevent third parties, such as exchanges, from paying yields on stablecoins.
This proposal aims to address banking sector worries over deposit flight, where customers might move funds to crypto platforms for higher yields. Coinbase's resistance echoes their earlier withdrawal of support in January, which led to the indefinite postponement of the bill's advancement by the Senate Banking Committee.
Background on the Legislation
The Senate bill seeks to clarify regulatory approaches to cryptocurrencies, with Republican Senator Thom Tillis and Democratic Senator Angela Alsobrooks leading the current efforts. Talks between stakeholders are ongoing, but Coinbase's stance has complicated negotiations.
Banking groups argue that stablecoin yield payments create risks by circumventing the GENIUS Act, which bans stablecoin issuers from offering yields to holders. They claim this could destabilize the traditional banking system by encouraging deposit outflows.
In contrast, the crypto industry, including Coinbase as a major lobbyist, maintains that these risks are overstated and that yield offerings are essential for their operations. They accuse banks of using the issue to engage in anticompetitive behavior.
Related developments include the White House hosting meetings to broker a compromise, though none has been reached. Republican Senator Cynthia Lummis emphasized on social media the need for bipartisan agreement to protect stablecoin rewards and prevent harm to community banks.
The House of Representatives passed its version of the legislation, the CLARITY Act, in July, with Republicans pushing for Senate action before potential changes in Congress after the midterms.
