Lead
Coinbase chief policy officer Faryar Shirzad criticized U.S. banking trade groups for urging regulators to block rewards, cashbacks, and discounts on purchases made with stablecoins. He called the request “un-American” and urged agencies implementing the GENIUS Act to “stick to the statutory text,” which only bars issuers from paying interest—not third parties from incentivizing usage. (Cointelegraph)
What Banks Want
Banking associations recently argued that letting exchanges or fintech partners offer perks tied to stablecoin payments constitutes an “indirect interest,” which they say should be prohibited alongside explicit yield. Their concern is straightforward: if stablecoins gain ground in retail payments, they could siphon as much as $6.6 trillion in deposits from banks over time (per a Treasury estimate) and cut into the $180 billion in card fees merchants paid in 2024.
Coinbase’s Counterpoint
Shirzad countered that once a stablecoin is issued, users should be free to spend it however they choose—including earning rewards similar to traditional card programs. He warned that banning third-party incentives would cement the status quo, shielding banks from competition and slowing innovation just as merchants seek cheaper payment rails. Coinbase, which benefits from higher USDC activity, frames the fight as one about consumer choice rather than exchange profits.
Why It Matters
- Merchant economics: Stablecoins settle instantly and can cost pennies to process, making them attractive to retailers tired of interchange fees.
- Policy precedent: If regulators side with banks, stablecoin reward cards and loyalty programs could disappear overnight, dulling adoption.
- Competitive neutrality: Allowing only banks to offer rewards—even as they lobby against stablecoins—would tilt the playing field before the GENIUS Act regime even launches.
The stablecoin debate is moving from legislation to implementation. Whether consumers can keep cashback perks may sound small, but it’s a litmus test for how serious regulators are about fostering open, competitive payment networks.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.