New Rules Could Shake Up Stablecoin Rewards

The Treasury Department has drafted a set of rules under the GENIUS Act that may limit how stablecoins can offer returns to holders. The proposal, released by the Office of the Comptroller of the Currency, spans 376 pages and will be open for public comment for 60 days. It specifically targets arrangements where a third party passes earnings from stablecoin reserves onto users. One major player that might feel the impact is Coinbase, which works with Circle to give users about a 4% yield on USDC deposits. The rules could force Coinbase to rethink how it shares revenue from those yields. Some experts say the language is broad enough to cover Coinbase’s current model, while others argue it can be sidestepped with tweaks. Coinbase earned $1. 3 billion from stablecoins last year, citing the USDC rewards as a key growth engine for 2025. If the rules bite, the company might need to adjust its program sooner than expected.Coinbase has not yet responded to inquiries about the potential changes. Reactions are mixed. A crypto lawyer believes the rules will affect Coinbase but expects legal challenges to push revisions. Circle’s leaders, however, praised the regulator for moving forward with the rules and see them as a step toward modernizing finance online. Banking lobbyists remain skeptical. They argue the proposed restrictions could let stablecoins lure customers away from traditional bank accounts that offer lower returns. A source in the banking sector said the new rules do not close all loopholes and that permanent legal limits are preferred. Negotiations between banks and crypto firms over stablecoin yields have stalled, with the White House trying to mediate. A law professor noted that the current proposal does not settle the conflict between the two sides. The debate over stablecoin rewards continues as regulators, banks, and crypto companies weigh the implications.