Coinbase has signalled a breakthrough in US crypto regulation after lawmakers reached a compromise on a key provision that had stalled a landmark bill, potentially paving the way for it to advance in the Senate.
At the heart of the dispute was whether crypto firms should be allowed to offer rewards on stablecoins, a feature that traditional banks argued could draw deposits away from the financial system and disrupt lending capacity. The impasse had delayed progress on the proposed legislation earlier this year.
The newly agreed framework introduces tighter restrictions on how such rewards can be structured, addressing concerns from the banking sector while still allowing crypto platforms to offer incentives tied to actual user activity.
“In the end, the banks were able to get more restrictions on rewards, but we protected what matters – the ability for Americans to earn rewards, based on real usage of crypto platforms and networks,” said Faryar Shirzad in a statement shared on X.
According to details reported by Punchbowl News, the compromise includes a broad prohibition on rewards that function like interest on traditional bank deposits. At the same time, it preserves limited forms of incentives linked to platform engagement, offering a middle ground between financial stability concerns and industry growth.
The proposed legislation, widely referred to as the Clarity Act, also directs regulators to establish a clearer framework for stablecoins. This includes developing disclosure requirements and defining permissible reward mechanisms, a move aimed at bringing greater transparency to a sector that has long operated in a regulatory grey area.
For the crypto industry, clearer rules are seen as critical to unlocking institutional investment and driving mainstream adoption. Executives have repeatedly argued that regulatory uncertainty has constrained growth, particularly in the United States, where enforcement actions have often outpaced formal rulemaking.
The political backdrop adds further momentum. Donald Trump has prioritized crypto reform during his current administration, signaling support for policies that encourage innovation while addressing systemic risks.
Globally, the implications extend beyond the US. Markets such as the UAE have already established structured regulatory environments through entities like Abu Dhabi Global Market and Dubai’s Virtual Assets Regulatory Authority, positioning themselves as hubs for digital assets. A clearer US framework could accelerate cross-border investment and further legitimize the sector.
However, the compromise also highlights the delicate balance regulators are attempting to strike. By limiting yield-like rewards, policymakers are seeking to prevent crypto products from mimicking traditional banking functions without equivalent oversight, while still allowing room for innovation.
As the bill moves closer to Senate consideration, attention will turn to how effectively the final framework reconciles these competing priorities and whether it can deliver the clarity the industry has long been seeking.
