Coinbase (NASDAQ:COIN) again rejected support for the Clarity Act this week over stablecoin yield provisions, drawing backlash from Senator Cynthia Lummis (R-Wyo.), who warned that blocking the bill now means waiting until 2030 for another chance at crypto legislation.

Coinbase Holds The Line

Representatives of Coinbase told Senate offices this week that the exchange couldn’t support the latest version of the legislation due to significant concerns about “stable yield language,” according to Punchbowl News. 

This marks the second time CEO Brian Armstrong has withdrawn support, famously stating in January that “we’d rather have no bill than a bad bill.”

The bill bans crypto platforms from paying users to hold stablecoins, similar to how banks pay interest on savings accounts. 

Coinbase earns substantial revenue by holding customer stablecoins and collecting the interest generated from backing assets like U.S. Treasuries. The legislation would eliminate this revenue stream.

The Banks vs. Crypto Battle

Banks argue that rewards on stablecoins would lead customers to withdraw deposits from savings accounts and hold “digital dollars” with higher yields, destabilizing their lending capacity. 

The crypto industry calls this anti-competitive behavior designed to protect legacy business models.

The latest draft allows limited activity-based rewards like loyalty programs or promotions while directing the SEC, CFTC, and Treasury Department to define rules within a year.

Lummis: We Can’t Wait

Senator Lummis fired back on X, stating that bipartisan compromise is necessary for the Clarity Act to pass. 

“We’re working around the clock to ensure stablecoin rewards are protected and to prevent deposit flight from community banks,” she wrote. “America’s financial future is at stake now—we can’t wait until 2030 for another chance.”

The crypto community split on Armstrong’s stance. Nico Cabrera posted a viral thread arguing that blockchain has 144 real use cases beyond yield and that Coinbase is blocking an entire industry over one business model. 

“If a technology needs incentives to be used, that’s not adoption,” Cabrera wrote.

Others defended Coinbase’s position, with users noting that the company needs to draw a line before Democrats potentially retake the House. 

Meanwhile, some declared they would stop using Coinbase over the stance, with #BoycottCoinbase trending briefly.

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