Coinbase CEO Brian Armstrong is defending the company's USDC rewards program against banking industry criticism. He argues that the rewards, which range from 3.75% to 4.5%, are not bank interest but yields derived from short-term US Treasuries via a revenue-sharing agreement with USDC issuer Circle.
The legal landscape for these programs is shaped by the GENIUS Act of July 2025, which prohibits stablecoin issuers from offering direct yield but provides a carve-out for non-issuers like Coinbase. Banking lobbyists have opposed this, citing risks of massive deposit flight from traditional savings accounts to stablecoins.
The proposed CLARITY Act, intended to regulate crypto market structures, has stalled as of September 2026 due to conflicts over reward program provisions. Armstrong claims that this legislative deadlock has inadvertently benefited Coinbase by preventing new competitors from entering the market under more defined rules.
Armstrong maintains that restricting domestic stablecoin rewards could drive users toward foreign-issued digital currencies that do not support US Treasury demand. He views the current rewards program as a vital tool for customer acquisition and a key element of Coinbase's competitive strategy.
