CLARITY Act Failure Hands Coinbase a Stablecoin Reward Edge, Bitwise CIO Says
Key Takeaways
- •The U.S. Senate's failure to pass the CLARITY Act leaves the division of digital asset oversight between the SEC and CFTC still undefined.
- •Bitwise's Chief Investment Officer said the bill's collapse preserves the current terms on which exchanges pay stablecoin rewards, potentially giving Coinbase an edge.
- •Bitcoin climbed about 8% in the two weeks after the Senate blocked the market-structure bill, indicating investors largely shrugged off the legislative setback.
- •The GENIUS Act prohibits stablecoin issuers such as Circle from paying interest or yield directly to holders, but the restriction does not extend to rewards exchanges pay on customer balances.
- •Coinbase, the largest cryptocurrency exchange in the United States, earns meaningful stablecoin revenue through a reserve-income sharing arrangement with Circle and pays users rewards for holding USDC.
The U.S. Senate's failure to pass the CLARITY Act could hand Coinbase an edge on stablecoin rewards, according to Bitwise's Chief Investment Officer, a development that crypto markets largely brushed aside.
Bitcoin climbed roughly 8% in the two weeks following the Senate's decision to kill the market-structure bill, a sign that the legislative setback did little to rattle investors.
Bitwise CIO Points to Stablecoin Rewards
As first reported by CoinGape, the Bitwise CIO argued that the bill's collapse leaves Coinbase with an advantage when it comes to stablecoin rewards. With the market-structure bill stalled in the Senate, the terms on which exchanges pay rewards to stablecoin holders remain unchanged — the practical underpinning of that advantage.
Background on the CLARITY Act
The CLARITY Act, formally the Digital Asset Market Clarity Act of 2025, cleared the U.S. House of Representatives in July 2025 with bipartisan support. The legislation is designed to establish a comprehensive regulatory framework for digital assets, drawing a clearer line between the jurisdictions of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The measure ultimately failed to advance in the Senate, leaving the SEC-CFTC boundary it set out to draw still undefined and digital asset firms operating under the existing patchwork of oversight.
Separately, the GENIUS Act, signed into law in July 2025, created the first federal framework for payment stablecoins and prohibits stablecoin issuers from paying interest or yield directly to holders. Because that prohibition is aimed at issuers — Circle, in the case of USDC — it does not directly cover rewards an exchange pays on customer balances, a distinction that separates issuer-paid yield from exchange-paid rewards.
Coinbase's Stablecoin Business
Coinbase, the largest cryptocurrency exchange in the United States, derives a meaningful portion of its revenue from stablecoins. Through its arrangement with Circle, the issuer of USDC, the exchange shares income generated on the reserves backing the token. The company also pays users rewards for holding USDC on its platform, an area the Bitwise executive indicated stands to benefit from the bill's failure. Whether the Senate revisits market-structure legislation — and how any eventual framework treats exchange-level rewards — remains the open question hanging over that business.
The report was published by CryptoNewsNet.
