Coinbase warns that stringent limits on US dollar stablecoin rewards under the GENIUS Act risk weakening American digital dollar competitiveness amid geopolitical shifts, as China and others move towards interest-bearing digital currencies.
Coinbase has warned that strict limits on rewards tied to US dollar stablecoins could weaken the competitiveness of American-regulated digital dollars as other jurisdictions move to offer interest-bearing central bank and digital currency alternatives.
The company told regulators that treating incentives paid by non-issuer platforms, such as exchanges and payment firms, as equivalent to issuer interest would exceed the statutory intent of the GENIUS Act and risk sidelining US stablecoins in cross-border payments, treasury management and on‑chain settlement. According to Coinbase, many market participants view platform rewards as commercially standard incentives rather than direct interest paid by an issuer.
The GENIUS Act, signed into law on July 18, 2025, created the first comprehensive federal framework for stablecoins and bars stablecoin issuers from paying interest directly; it also tightened backing and transparency requirements for tokens pegged to the dollar. Industry participants and some legal advisers say the statute leaves room for differing interpretations about whether third‑party rewards fall within that prohibition. Industry coverage has described those ambiguities as a central battleground for how firms structure yield and incentive programmes going forward.
The debate has taken on geopolitical overtones after announcements from China signalling plans to pay interest on the digital yuan. Market participants and some crypto firms say that if US rules are interpreted so tightly that they curtail yield-bearing features around US‑pegged stablecoins, China’s interest-bearing e‑CNY could gain a structural advantage in emerging payments networks.
Several industry developments illustrate how firms are adapting. Anchorage Digital, a federally chartered crypto bank, has set up a separate legal vehicle to distribute rewards on USDtb and USDe tokens while asserting compliance with the GENIUS Act, according to reporting by CoinDesk. Coinbase itself continues to operate a USDC rewards programme for eligible customers in multiple jurisdictions, and its help centre details eligibility, automatic application of rewards and regional availability. At the same time, other firms have altered offerings in response to overseas regulation: Coinbase ended its USDC rewards programme for customers in the European Economic Area after the EU’s MiCA rules took effect, a decision reported by The Blockchain.
Banking groups in the United States have warned regulators that unrestricted rewards tied to stablecoins could siphon retail deposits from traditional banks. Proponents of continuing some rewards argue that economic incentives are integral to the utility of stablecoins in commercial use cases and that overbroad enforcement could hobble US participation in global digital finance.
Regulators face a choice between a narrower reading that permits third‑party incentive structures and a broader interpretation that treats most yield-like payments as prohibited issuer interest. Legal and market workarounds, such as separate-distribution entities and carefully modelled reward programmes, are already emerging as firms test the boundaries of the law while seeking to preserve liquidity and competitive parity.
As the implementation of the GENIUS Act continues to be defined by regulators and courts, the outcome will help determine whether US‑regulated stablecoins remain commercially attractive for large-scale treasury use and cross‑border payments, or whether foreign digital currencies that explicitly permit interest will gain ground in the nascent global landscape of digital money.
- https://thenewscrypto.com/stablecoin-yield-debate-intensifies-as-coinbase-pushes-back-against-regulatory-limits/ – Please view link – unable to able to access data
- https://www.coindesk.com/business/2025/11/25/anchorage-digital-aims-to-pay-rewards-on-ethena-s-tokens-under-genius-act/ – Anchorage Digital, a federally chartered crypto bank, is launching a rewards program for holders of USDtb and USDe tokens. This initiative aims to comply with the GENIUS Act, which prohibits stablecoin issuers from paying interest directly. The rewards are distributed through a separate entity, Anchorage Digital Neo Ltd., allowing institutions to earn rewards on idle holdings without staking or locking up assets. This structure provides flexibility in treasury management while adhering to regulatory requirements. ([coindesk.com](https://www.coindesk.com/business/2025/11/25/anchorage-digital-aims-to-pay-rewards-on-ethena-s-tokens-under-genius-act?utm_source=openai))
- https://help.coinbase.com/coinbase/getting-started/crypto-education/usd-coin-rewards-faq – Coinbase offers a rewards program for eligible customers holding USDC in their accounts. To participate, customers must be in an eligible region, trade eligible, and hold at least $1 of USDC. The program is available in various countries, including the United States, United Kingdom, Australia, and Singapore. Rewards are automatically applied, with no maximum holding limit. ([help.coinbase.com](https://help.coinbase.com/coinbase/getting-started/crypto-education/usd-coin-rewards-faq?utm_source=openai))
- https://coincu.com/news/genius-act-stablecoin-rewards/ – Despite the GENIUS Act’s restrictions on stablecoin issuers, Coinbase and PayPal continue to offer rewards on stablecoin holdings. They frame these returns as non-interest incentives, structuring their programs to comply with the Act’s provisions. This approach highlights regulatory ambiguities impacting stablecoin market strategies and could influence future legislative adjustments in U.S. crypto regulation. ([coincu.com](https://coincu.com/news/genius-act-stablecoin-rewards/?utm_source=openai))
- https://apnews.com/article/94fa3c85e32ec6fd5a55576cf46e58ea – On July 18, 2025, President Donald Trump signed the GENIUS Act into law, establishing new U.S. regulations for stablecoins—a type of cryptocurrency pegged to stable assets like the U.S. dollar. The law aims to enhance consumer protections, increase stability in the crypto market, and underscore the industry’s growing influence in Washington, bolstered by campaign donations and lobbying. The bipartisan bill marks a turning point as Trump, once skeptical of cryptocurrency, now promises to make the U.S. a global crypto leader. ([apnews.com](https://apnews.com/article/94fa3c85e32ec6fd5a55576cf46e58ea?utm_source=openai))
- https://www.coinbase.com/blog/the-genius-act-passed-here-is-what-it-means-for-usdc – The GENIUS Act, signed into law on July 18, 2025, establishes a federal framework for stablecoins like USDC. It requires stablecoins to be fully backed by U.S. dollars or 3-month U.S. Treasury bills, ensuring transparency and safety. Coinbase, as a major distributor of USDC, views this as a significant milestone, providing clarity and confidence for consumers and institutions in the digital economy. ([coinbase.com](https://www.coinbase.com/blog/the-genius-act-passed-here-is-what-it-means-for-usdc?utm_source=openai))
- https://www.the-blockchain.com/2024/11/29/coinbase-ends-usdc-rewards-for-eu-clients-citing-mica-regulations/ – Coinbase has ended the USDC Rewards program for customers in the European Economic Area (EEA), effective December 1, 2025. This decision follows the European Union’s adoption of new Markets in Crypto-Assets (MiCA) regulations, which require new rules for issuing stablecoins. Affected users have expressed frustration over the discontinuation of the program, which allowed them to earn yields on their USDC balances. ([the-blockchain.com](https://www.the-blockchain.com/2024/11/29/coinbase-ends-usdc-rewards-for-eu-clients-citing-mica-regulations/?utm_source=openai))
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The narrative is recent, published on January 2, 2026. Similar discussions have appeared in other outlets, such as a December 30, 2025, article on Cointelegraph. ([cointelegraph.com](https://cointelegraph.com/news/coinbase-exec-warns-senate-stablecoin-misstep-could-hand-china-a-global-edge?utm_source=openai)) The GENIUS Act was signed into law on July 18, 2025, and its implications have been a topic of ongoing debate. ([coinbase.com](https://www.coinbase.com/blog/the-genius-act-passed-here-is-what-it-means-for-usdc?utm_source=openai)) The article includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged. ([wired.com](https://www.wired.com/story/genius-act-loophole-stablecoins-banks/?utm_source=openai)) The narrative is based on a press release, which typically warrants a high freshness score. ([coinbase.com](https://www.coinbase.com/blog/the-genius-act-passed-here-is-what-it-means-for-usdc?utm_source=openai)) The earliest known publication date of substantially similar content is December 30, 2025. The narrative includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged. ([wired.com](https://www.wired.com/story/genius-act-loophole-stablecoins-banks/?utm_source=openai))
Quotes check
Score:
9
Notes:
The direct quote from Faryar Shirzad, Coinbase’s chief policy officer, appears to be original, with no identical matches found in earlier material. This suggests potentially original or exclusive content. No online matches were found for the quote, raising the score but flagging it as potentially original or exclusive content.
Source reliability
Score:
4
Notes:
The narrative originates from TheNewsCrypto, an obscure, unverifiable, or single-outlet platform, which raises concerns about its reliability. The source’s credibility is uncertain, which is a significant concern.
Plausability check
Score:
7
Notes:
The claims about the GENIUS Act and its implications for stablecoin rewards are plausible and align with information from reputable sources. However, the lack of supporting detail from other reputable outlets and the source’s questionable reliability reduce the score. The tone and language are consistent with the region and topic, and the structure is focused on the claim without excessive or off-topic detail.
Overall assessment
Verdict (FAIL, OPEN, PASS): FAIL
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The narrative presents plausible claims about the GENIUS Act and its implications for stablecoin rewards, with a potentially original quote from a Coinbase executive. However, it originates from an unreliable source, TheNewsCrypto, which raises significant concerns about its credibility. The lack of supporting detail from other reputable outlets further diminishes the narrative’s trustworthiness. Given these factors, the overall assessment is a ‘FAIL’ with medium confidence.