“WASHINGTON -- The cryptocurrency and banking industries are locked in a lobbying battle over digital tokens that yield annual payouts, a fight that threatens to derail legislation intended to bring crypto into mainstream finance.
The two sides are clashing about what crypto firms call rewards, or annual payments to investors based on a percentage of their total holdings. They are commonly used for stablecoins, popular tokens typically pegged to the U.S. dollar and used for trading, overseas payments and money transfers.
To banks, rewards on stablecoins from companies such as Coinbase Global that pay out 3.5% resemble high-yielding deposits -- but without the regulations they face for holding customers' cash.
Bank-industry groups have flooded lawmakers with letters and phone calls arguing the rewards would decimate Main Street lenders.
The national average interest rate for a standard interest-bearing checking account is below 0.1%.
"We are hearing every day from community bankers who are worried about the impact stablecoins offering yield will have on their deposit bases and their ability to lend and support their local communities," said Brooke Ybarra, senior vice president for innovation and strategy at the American Bankers Association, an industry group. Thousands of bankers have sent senators letters through the organization in the past week.
The fight is one of the forces that delayed an expected vote Thursday by the Senate Banking Committee to advance crypto market-structure legislation. Sen. Tim Scott (R., S.C.) postponed a markup of the bill Wednesday night, about 12 hours before it was slated to start, saying bipartisan negotiations are continuing. The bill would represent the industry's first regulatory framework for all digital assets. The House already passed its version of the bill, but Republicans likely need to win support from nearly everyone in their party and some Democrats to get 60 votes and pass it in the Senate.
The rewards fight has muddied the process by giving pause to some Republicans on the Senate Banking Committee, such as North Carolina Sen. Thom Tillis. It also has concerned some Democrats, who are also pushing for ethics restrictions in the bill to address President Trump's crypto activity and have other questions that could hamper the effort.
JPMorgan Chase, Citigroup and other big banks are pushing back on stablecoin rewards while simultaneously developing their own plans for cryptocurrency products and partnerships. Some, including Bank of America, are weighing whether to launch their own stablecoins.
Crypto leaders are accusing the American Bankers Association and other groups of making local lenders the face of their campaign when the effort is driven by the nation's biggest banks, which don't want crypto firms disrupting their established business. The incumbent financial firms argue that the loss of deposits will hit smaller banks especially hard.
"This is probably one of the biggest lobbying efforts we've seen in a long time," said Summer Mersinger, chief executive of the Blockchain Association, a crypto-industry group. The organization's advocacy helped lead last year to a new stablecoin law and an executive order by Trump establishing a new crypto-regulatory framework. "They are using the community banks to deliver a message that's really a much bigger deal for some of these larger banks," she said.
Members of Stand With Crypto, one of the industry's biggest grassroots organizations, have also flooded Congress with calls to pass industry rules.
In a bid to find a compromise, a recent draft of the market-structure bill seeks to prohibit some rewards simply for holding stablecoins, but allows them if they are tied to other activities such as using stablecoins for payments or receiving incentives or rewards.” [1]
Does Coinbase have stablecoins with rewards?
Yes, Coinbase offers rewards for holding the stablecoin USDC, currently around 3.5% APY for Coinbase One subscribers (paid members), though they recently ended free user rewards.
Rewards are earned by holding USDC and are paid out weekly, but are subject to ongoing regulatory scrutiny in the U.S., potentially impacting future availability or terms.
How it Works:
Hold USDC: You simply need to hold USDC (USD Coin) in your Coinbase account.
Earn Rewards: Rewards are calculated daily on your balance and paid out weekly, usually on Fridays.
Coinbase One: Access to these rewards is now primarily for Coinbase One (paid subscription) members, with rates around 3.5%.
Key Points:
USDC: The rewards program centers on USDC, a stablecoin pegged 1:1 to the US Dollar.
Regulatory Landscape: The future of these rewards is a topic of debate with U.S. lawmakers, as they generate significant revenue for Coinbase and compete with traditional banks.
Availability: Rates and availability can vary by region and account type, with some regions like the EEA having restrictions.
1. Banks and Crypto Firms Clash Over Tokens That Pay More Than Deposits. Ramkumar, Amrith; Vicky Ge Huang. Wall Street Journal, Eastern edition; New York, N.Y.. 15 Jan 2026: B1.
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