From 24/7 Wall St. · Sam Daodu · · 2m
Stablecoin rewards keep flowing after crypto bill dies
Millions earn interest on dollar-pegged tokens, but the Senate's failure to regulate them left a murky funding question unanswered.
In brief
Millions earn interest on dollar-pegged tokens, but the Senate's failure to regulate them left a murky funding question unanswered. Stablecoin rewards survive because the CLARITY Act failed, but the GENIUS Act ban takes effect in January 2027, threatening the entire system. Originally reported by 24/7 Wall St..
What are stablecoin rewards
Stablecoin rewards are interest payments for holding dollar-pegged tokens like USDC, similar to savings account interest. Millions collect them without knowing who actually funds them.
“Millions of people collect stablecoin rewards without knowing who actually funds them”
The CLARITY Act failed in September
The Senate failed to pass the CLARITY Act on September 15, 2026, which would have limited stablecoin rewards while allowing activity-based payments. The compromise died with the broader legislation.
Reserve income funds the yields
Circle earned $668 million in Q2 2026 from USDC reserves held in Treasury bills and repurchase agreements. This income flows through Coinbase to users as rewards, funded by the Federal Reserve's policy rate.
“Somebody is paying that yield, and it is not the exchange.”
Banks see a deposit threat
Banks worry interest-bearing stablecoins compete with no-interest checking accounts, potentially redirecting deposits away from traditional lending. The American Bankers Association rejected the CLARITY Act compromise.
Coinbase and Circle stocks didn't rally
When the CLARITY Act failed, neither Coinbase nor Circle saw relief rallies. Circle fell 5.79% that week while Coinbase gained only 0.98%, despite both rebounding on Federal Reserve decision day.
Higher rates cut both ways
Rising Federal Reserve rates increase reserve income from stablecoins but reduce risk appetite for spot crypto trading. Coinbase's trading fees carry half its revenue and shrink when yields climb.
The GENIUS Act arrives in January
The GENIUS Act, effective January 2027, prohibits stablecoin issuers from paying interest directly. This threatens the entire reward system unless issuers find workarounds through affiliate payments.
Banks keep lobbying to shut it down
The American Bankers Association continues fighting stablecoin rewards, and regulators could challenge affiliate payment workarounds. The reward system survives for now, but banking pressure remains relentless.
“the reward keeps arriving, the Federal Reserve keeps funding it, and a room full of bank lobbyists is still working to shut it off.”
The big picture
Stablecoin rewards survive because the CLARITY Act failed, but the GENIUS Act ban takes effect in January 2027, threatening the entire system.
