Coinbase has once again refused to back the CLARITY Act in the US Senate. The company rejects the updated stablecoin yield provisions, which would ban passive returns on stablecoin holdings.
On March 25, Coinbase informed Senate staff that it cannot support the current version of the bill. The company expressed "significant concerns" about the yield provisions in the draft legislation. In January, Coinbase had already rejected an earlier draft, derailing the planned vote in the Senate Banking Committee. As a result, the largest publicly traded crypto exchange in the US is jeopardizing the central crypto market structure bill for a second time within three months.
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Billion-dollar USDC business at the center of the conflict
Behind Coinbase's resistance lies a concrete financial interest. The company generated approximately $1.35 billion in stablecoin revenue in 2025. In the third quarter alone, $355 million flowed from this business segment. Moreover, the bulk of that revenue stems from a distribution agreement with Circle, the issuer of the USDC stablecoin.
The structure of this agreement makes Coinbase's position understandable. For USDC held directly on the Coinbase platform, the exchange receives 100 percent of reserve income. When USDC is held outside the platform, Circle and Coinbase split the proceeds equally. In 2024, Circle paid a total of $908 million to Coinbase, out of total distribution costs of $1.01 billion. Coinbase now holds roughly 20 to 22 percent of total USDC in circulation, up from 5 percent in 2022.
A ban on passive stablecoin yields would directly undermine this business model. The reserve income depends on interest earned from USDC reserves. Therefore, Coinbase's rejection is driven by economics rather than ideology.
Tillis-Alsobrooks compromise fails due to Coinbase
Senators Thom Tillis (Republican) and Angela Alsobrooks (Democrat) presented a stablecoin yield compromise on March 10. On March 20, both confirmed a preliminary agreement, supported by the White House. In addition, the industry considered the issue "99 percent resolved."
The compromise distinguishes between passive and active returns. Passive yields for simply holding a stablecoin would fall under the ban. Activity-based rewards, such as those for payments or transactions, would remain allowed. Banking lobbyists had pushed for precisely this distinction because passive stablecoin yields could draw deposits away from the traditional banking system.
Notably, Coinbase is increasingly isolated with this stance. Other major industry players such as Ripple, Andreessen Horowitz, and Kraken support the bill. Senator Cynthia Lummis actively advocated for the protection of stablecoin rewards. However, the bipartisan compromise found broad support. CEO Brian Armstrong made the company's position unmistakably clear in January: no bill at all is preferable to one that restricts stablecoin yields.
Second blockade in three months
Coinbase had already rejected the earlier CLARITY Act draft in January. Consequently, the markup in the Senate Banking Committee, scheduled for January 16, did not take place. Negotiations stalled for weeks. The CLARITY Act aims to create a federal framework for cryptocurrencies in the US. Furthermore, it would formally divide oversight between the SEC and the CFTC. The House of Representatives passed its version in July 2025. In the Senate, progress has stalled since then.
Beyond the stablecoin yield debate, additional conflicts weigh on the negotiations. Democrats demand ethics provisions that would bar politicians from profiting on crypto engagements. Republicans reject these measures. At the same time, the Senate negotiates an amendment to the GENIUS Act on stablecoin regulation. Its yield provisions touch on the same fundamental debate. The window is closing. After the Easter recess, which ends on April 13, a Senate Banking Committee markup is expected in the second half of April. May 2026 marks the informal deadline. After that, midterm campaign dynamics are likely to dominate the agenda.
Coinbase is therefore playing a risky game. The company applies maximum negotiating pressure to alter the yield provisions in its favor. At the same time, it risks the CLARITY Act failing entirely. For Coinbase itself, the outcome could prove paradoxical. In the short term, a regulatory vacuum protects the existing USDC business. In the long run, however, it prevents the institutional regulatory clarity that would benefit the exchange.
