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Friday Nov 14 2025 03:10
2 min
Crypto exchange Coinbase has strongly condemned US banking groups for urging regulators to prohibit merchant rewards, cashbacks, and discounts offered to customers paying with stablecoins, deeming the request "unamerican."
The dispute centers on the legal interpretation of the GENIUS Act, which forbids stablecoin issuers from providing interest or yield to token holders but doesn't explicitly extend this prohibition to crypto exchanges or related businesses.
Banking groups argue that an "indirect interest" arises when a third party financially benefits from a connection to the stablecoin issuer. However, Coinbase's chief policy officer, Faryar Shirzad, vehemently disagreed in a post on X, calling on regulators to "stick to the statutory text."
"There is something unamerican about bank lobbyists pressing regulators to tell stablecoin customers what they can and cannot do with their own money after it is issued."
The banking groups are reportedly concerned that widespread adoption of yield-bearing stablecoins could weaken the banking system, which relies on attracting deposits with high-interest savings products to back loans.
Widespread stablecoin adoption could trigger over $6.6 trillion in deposit outflows from traditional banking, according to a US Treasury Department estimate in April.
Coinbase contends that stablecoins could significantly reduce the over $180 billion in card fees paid by US merchants in 2024; however, "big banks" are allegedly obstructing progress and preventing stablecoin innovations from challenging traditional payment systems.
Centralized exchanges benefit when stablecoin trading surges. Companies like Coinbase profit from stablecoin adoption through fees generated by increased trading volume.
Many crypto exchanges issue credit cards to incentivize merchant spending with cashback and crypto rewards — an offering Shirzad fears is under threat but remains confident that "common sense will prevail."
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