Coinbase threatened to withdraw support for landmark crypto legislation ahead of this week's Senate vote, as a deepening dispute over stablecoin rewards threatens to derail the bill entirely.
The Digital Asset Market Clarity Act faces a critical markup in the Senate Banking Committee on Wednesday.
Bernstein analysts warned Monday the legislative window is "here and now" or the opportunity may vanish.
What Happened
Coinbase told lawmakers it may abandon the CLARITY Act if Senate drafts restrict stablecoin rewards beyond disclosure requirements, according to Bloomberg.
The exchange generated approximately $1.3 billion from stablecoin activities in 2025.
Banking groups want to limit rewards to regulated institutions, arguing yield-bearing accounts could drain deposits.
Treasury estimated stablecoin adoption could divert $6.6 trillion from traditional banks.
The dispute stems from July 2025's GENIUS Act, which barred issuers from paying yield directly but allowed platforms to offer rewards.
Exchanges currently provide 2-4% annual returns on stablecoin balances.
Read also: Crypto Funds Lose $454M As Fed Rate-Cut Hopes Evaporate In January
Why It Matters
The stablecoin market has reached $308 billion in capitalization, positioning it as systemically important financial infrastructure.
Bernstein analysts said the bill must advance by Q2 2026 to avoid midterm election dynamics.
Both sides treat the rewards issue as a red line, risking indefinite delays.
The CLARITY Act passed the House in July 2025 and aims to divide oversight between the SEC and CFTC.
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