USDCoinbase Warns of CLARITY Act Withdrawal as $6 Trillion Stablecoin Deposit Shift Alarms U.S. Banks
Stablecoin Rewards Fight Exposes Deepening Rift Between Crypto Platforms and Traditional Finance
TL;DR
- Coinbase said it may withdraw support for the CLARITY Act over provisions affecting stablecoin rewards that generated about $1.3 billion in 2025.
- Bank of America CEO Brian Moynihan warned that up to $6 trillion, or roughly 30%–35% of U.S. bank deposits, could move into stablecoins.
- Lawmakers delayed a January 15, 2026 markup as banking groups and crypto firms clashed over interest-bearing stablecoins.
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Coinbase said on January 12, 2026 that it could pull support for the Digital Asset Market CLARITY Act if lawmakers proceed with language restricting stablecoin rewards, placing new strain on a bill meant to provide long-sought regulatory clarity. The warning came days before a scheduled January 15, 2026 markup that was later delayed, adding uncertainty to U.S. crypto policy discussions already affecting crypto price movements, the crypto price index, and shifts in coin market cap.
Stablecoin rewards sit at the center of the dispute. Coinbase disclosed that stablecoin-related rewards generated approximately $1.3 billion in revenue during 2025, driven by interest earned on reserves backing U.S. dollar–pegged tokens. Certain Coinbase products currently offer about 3.5% rewards on eligible stablecoin balances, a structure the company has described as core to its business rather than promotional.
Coinbase CEO Brian Armstrong publicly criticized the draft legislation, saying, “We’d rather have no bill than a bad bill.” Armstrong said the proposal was “materially worse than the status quo,” pointing to provisions that would end stablecoin rewards and introduce restrictions affecting decentralized finance, tokenized equities, and data privacy.
Banking executives have raised parallel concerns from the opposite side of the debate. Bank of America CEO Brian Moynihan warned during a recent earnings call that as much as $6 trillion in U.S. bank deposits could migrate into stablecoins if interest-bearing models are permitted to scale. Moynihan said the estimate represents roughly 30% to 35% of total U.S. commercial bank deposits.
Moynihan said stablecoin structures resemble money market funds, with reserves typically held in short-term U.S. Treasuries or cash equivalents rather than deployed as loans. He warned that a large-scale deposit shift could reduce banks’ lending capacity and push institutions toward more expensive wholesale funding, raising borrowing costs for households and businesses.
Banking trade groups, including the American Bankers Association, have urged lawmakers to prohibit interest payments on stablecoins, arguing that such products compete with bank deposits without equivalent regulatory requirements. Legislative drafts under discussion would bar digital asset service providers from paying interest solely for holding stablecoins while allowing certain activity-based rewards.
The policy clash has already reached markets. Coinbase shares fell about 6.5% to $23 following public opposition to the bill, according to market data at the time. The reaction illustrated how regulatory developments are feeding directly into crypto price behavior and broader asset valuations across the coin market cap spectrum.
Debate around the CLARITY Act continues as lawmakers weigh banking-sector warnings against crypto industry objections. Stablecoins now occupy a central role in U.S. discussions on payments, market structure, and financial stability, with legislative outcomes closely watched by participants tracking crypto price levels and movements in the crypto price index.
This article has been refined and enhanced by ChatGPT.
