Stablecoin Regulation Deadlock Shakes Cryptocurrency Market: Coinbase (COIN.US) Leads Opposition, Key Bill Forced to Postpone Review

With the eagerly anticipated digital asset bill in the Senate postponed for debate due to intense discussions on stablecoin regulation clauses, the cryptocurrency industry is gradually being replaced by anxiety, overflowing with optimism in the first year of Trump's return to the White House. On Wednesday, the Senate Banking Committee postponed discussion of the bill, and hours earlier, Coinbase (COIN.US) announced that it was withdrawing its support for the latest version of the bill. In the bill, clauses restricting cryptocurrency companies from providing rewards or incentives for users holding stablecoins were strongly opposed by platforms such as Coinbase. Stablecoins are the cornerstone of the cryptocurrency asset field, and their use has surged since relevant legislation was passed in the United States last July. After successfully helping Trump win the election and pushing through the stablecoin bill, cryptocurrency industry executives are now worried that a deadlock in regulating tokens linked to the US dollar could leave the US regulatory framework behind other markets. Dea Markova, policy director at cryptocurrency custody service provider Fireblocks, said, "This delay is worrying because it could lead to the United States becoming one of the few major digital asset centers without clear capital market rules by 2026." Affected by this news, Coinbase's stock price plummeted by 4%, while Circle (CRCL.US), a stablecoin issuer, and cryptocurrency platform Gemini (GEMI.US) also saw their stock prices drop by around 5%. According to the latest proposal, providing rewards for stablecoins may be banned, although certain types of incentives may be allowed. However, Nana Murugesan, former senior executive at Coinbase, pointed out that the terms regarding what specific rewards are allowed are not clear. For a long time, cryptocurrency companies have attracted users by offering rewards and incentives to encourage them to hold digital assets long-term rather than cashing out into fiat currency. Some tokens (such as the USDe issued by Ethena) even embed the rewards mechanism into their structure. Coinbase offers rewards to users holding Circle's USDC stablecoin, similar to the interest model of traditional savings accounts. Ari Redbord, Global Head of Policy and Government Affairs at TRM Labs, explained, "The uniqueness of the stablecoin reward mechanism lies in its span across payment settlement, savings-like financial management, and market incentives." This also explains why "as the bill enters the revision process, a narrow technical issue has evolved into a core policy dispute." Several executives said that restrictions on such incentives could put regulated US cryptocurrency companies at a competitive disadvantage. Murugesan noted, "When regulations are unclear, they are inevitably subject to multiple interpretations. If restrictions are implemented, it will theoretically only put US companies at a disadvantage, while overseas companies can still continue to offer incentives." Bank of America Corp also expressed caution about the development of stablecoins, warning that interest-bearing stablecoins might divert traditional bank deposit funds. The "Genius Act" passed last year allows banks to issue proprietary stablecoins but explicitly prohibits stablecoin issuers from paying interest. Currently, multiple cryptocurrency companies have submitted bank license applications. It is worth noting that Coinbase is also a donor to the Trump administration's White House banquet project. The company's fierce resistance to the bill also indirectly demonstrates the increasing influence of the cryptocurrency industry in Washington. Coinbase CEO and Trump supporter Brian Armstrong posted on the social platform X that due to the bill having "too many issues," they have decided to withdraw their support for the latest version. This statement was immediately countered by Senate Banking Committee member Cynthia Lummis, who responded on X that the cryptocurrency industry's reaction "just proves that they are not yet ready for regulatory compliance." However, Michael Bucella, managing partner at Neoclassic Capital, believes that the bill's postponement does not mean it is completely shelved. He emphasized, "I firmly believe that this bill will be passed during this administration. The biggest unknown at the moment is how the final bill will be presented."