Crypto Supporters Revive Stablecoin Incentive Efforts as Major Senate Vote on Market Structure Bill Approaches

Stablecoin Rewards Spark Intense Debate Ahead of Senate Vote

As the Senate Banking Committee prepares for a pivotal vote on a crypto market structure bill next Thursday, discussions around stablecoin incentives have intensified.

Recently, hundreds of community bank executives called on U.S. senators to safeguard local lending from what they see as potential threats posed by stablecoins. Their concerns were met with resistance from prominent figures in the crypto sector, including Faryar Shirzad, Chief Policy Officer at Coinbase.

Shirzad emphasized on X that, “Congress already addressed this issue in the GENIUS Act—revisiting it now only introduces uncertainty and could endanger the U.S. Dollar’s future as commerce transitions to blockchain,” referencing significant stablecoin legislation enacted earlier this year.

Current regulations permit platforms like Coinbase to offer yield-like rewards to stablecoin holders. However, organizations such as the American Bankers Association argue that these practices could harm local economies.

“Permitting incentives like interest or rewards on stablecoins may encourage customers to withdraw savings from banks, threatening the lending that supports growth in communities nationwide,” the association’s community bankers council wrote in a letter to Congress on Monday.

Cody Carbone, CEO of The Digital Chamber—a leading crypto trade group—told Decrypt that lawmakers are closely examining stablecoin rewards, which remain a central issue to resolve before the bill can advance.

On Tuesday, over a dozen senators supportive of crypto gathered in Banking Committee Chair Tim Scott’s office. According to Crypto in America, the three-hour meeting covered topics such as ethics guidelines, bipartisan oversight at crypto regulatory agencies, and rules specific to decentralized finance (DeFi), though the extent of progress remains unclear.

Carbone noted that lawmakers have assured him any new regulations will ensure a level playing field between banks and crypto companies, avoiding favoritism.

“This issue has become so prominent that it will be addressed in any forthcoming legislation,” Carbone told Decrypt. “While it’s too soon to say if it’s a dealbreaker, we’re eagerly awaiting the outcome.”

This Thursday, The Digital Chamber plans to bring around 55 representatives from various crypto organizations—including exchanges, token issuers, and DeFi projects—to Washington, D.C., for meetings with more than 20 Senate offices. Carbone highlighted the group’s diversity and broad industry representation.

Crypto Industry Pushes for Legislative Progress

Carbone explained that the goal is to demonstrate the crypto sector’s strong commitment to advancing legislation. Despite efforts last year by pro-crypto Republicans to pass the bill by July, several deadlines—including those in October and December—were missed.

Coinbase’s Shirzad framed the stablecoin rewards debate as a matter of global competition, pointing out that China has announced plans to pay interest to users of its Digital Yuan. He argued that imposing restrictions on stablecoin rewards could allow China to gain an edge.

Ji Kim, CEO of the Crypto Council for Innovation, echoed Shirzad’s concerns on X, warning that consumer use of stablecoins could shift overseas if U.S. regulations become too restrictive. He also cautioned that certain provisions in the bill might impact the U.S. dollar’s global standing.

“Stablecoin rewards help attract new users, foster customer loyalty, encourage merchant adoption, and maintain U.S. leadership in stablecoin innovation,” Kim added.

Carbone expects greater clarity on the bill’s language by Thursday. Broadly, the proposed legislation seeks to define the regulatory roles of the SEC and CFTC, while establishing registration requirements for exchanges and intermediaries.