Intense debate over stablecoin regulations in the US Senate has brought the much-anticipated digital asset bill to a standstill. The fervent optimism that enveloped the cryptocurrency industry during the first year of Donald Trump's return to office is now being replaced by anxiety. The US Senate Banking Committee postponed its consideration of the bill on Wednesday, mere hours after Coinbase Global, Inc., one of the world's largest cryptocurrency exchanges, announced it was withdrawing its support for the latest version of the legislation. Coinbase and other crypto firms strongly oppose several clauses in the bill, including those that would restrict companies from providing yield on stablecoins held by customers. Stablecoins are a core pillar of the crypto asset ecosystem. Their adoption surged following the enactment of US stablecoin regulations in July. Having previously helped Trump win the election and facilitated the smooth passage of stablecoin-related legislation, industry executives now fear that the regulatory deadlock surrounding dollar-pegged stablecoins could cause the US regulatory framework to fall behind other markets. "The delay in considering the bill is concerning," said Diya Markova, Head of Policy at crypto custodian Fireblocks. "This could result in the US becoming one of the few major trading hubs without clear capital market rules for digital assets by 2026." The latest proposal in the bill seeks to prohibit stablecoin issuers from paying yields, though it might permit certain types of reward mechanisms. However, Nana Murugesan, a former senior executive at Coinbase, pointed out that the bill's language is vague regarding which specific reward types would be exempt. Cryptocurrency firms have long used yield as a key tool to attract users, incentivizing them to hold digital assets long-term instead of converting them to fiat currency. The yield mechanism is even embedded within the architecture of some tokens, such as the USDe stablecoin issued by Ethena. Coinbase provides rewards to users who hold the USDC stablecoin, issued by Circle Internet Group, in their accounts—a model somewhat analogous to interest payments on traditional bank savings accounts. "The stablecoin reward mechanism spans payments, savings-like behavior, and market incentives," explained Ari Redbord, Global Head of Policy and Government Affairs at blockchain analytics firm TRM Labs. This, he said, explains "why a seemingly niche technical issue evolved into a central policy dispute during the bill's revision process." Some industry executives argue that imposing limits on stablecoin rewards could put US-regulated crypto firms at a competitive disadvantage. "Where regulatory rules are ambiguous, differing interpretations are inevitable," stated Murugesan. "Theoretically, if these restrictions are implemented, only domestic US businesses would be affected, while overseas crypto firms could continue to offer rewards to users." The US banking industry has previously warned that yield-bearing stablecoins could siphon deposits away from traditional banks. Following the passage of the 'Genius Act' last year, which allows banks to issue their own stablecoins, several crypto firms have applied for banking licenses. That act explicitly prohibits stablecoin issuers from providing interest. Coinbase's swift stance also reflects the crypto industry's growing influence in Washington's political circles—the company was one of the funders of a ballroom Trump had built at the White House. Coinbase CEO Brian Armstrong, a Trump supporter, posted on social media platform X that the company was withdrawing its support because the latest version of the bill had "too many problems." Senator Cynthia Lummis, a member of the Senate Banking Committee, subsequently posted a rebuttal on X, stating that such statements from crypto firms "precisely demonstrate they are not yet ready to comply."
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