Clash Over Stablecoin Yield Jeopardizes CLARITY Act’s Future

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Coinbase CEO Brian Armstrong is defending his company’s decision to withdraw support from the Digital Asset Market Clarity Act. This move came after the White House reportedly characterized it as a “rug pull” against both the administration and the wider crypto industry.

According to a report by Crypto in America host Eleanor Terrett, a source close to the administration stated the White House is “furious” with Coinbase’s “unilateral” withdrawal ahead of a key Senate Banking Committee markup.

The source indicated the administration may fully abandon the legislation unless Coinbase returns to negotiations with a stablecoin yield agreement acceptable to banking interests. The White House did not respond to a request for comment.

The core disagreement centers on stablecoin yield. Banking groups contend that allowing crypto platforms to offer interest-like returns on stablecoin balances could pull deposits away from traditional savings accounts, raising financial stability concerns. The Senate’s draft bill aimed to prohibit digital asset providers from paying yield simply for holding stablecoins, while permitting activity-based rewards for transactions, staking, or liquidity provision.

For Coinbase, the financial stakes are considerable. S&P Global projected Coinbase’s stablecoin-related revenue would exceed $1 billion in 2025, largely from distribution payments via its USDC partnership with Circle. Provisions restricting such rewards could threaten a major revenue stream.