Crypto Bill Stalls Over $1.3T Bank Deposit Threat
A landmark bill to regulate the U.S. digital-asset market has been brought to a standstill by a fierce dispute between the banking industry and crypto firms. The conflict centers on stablecoin reward programs, such as the 3.5% yield offered by Coinbase on its USDC stablecoin. Banking groups, led by the Independent Community Bankers of America, warn that such yields could drain as much as $1.3 trillion in deposits from community banks and slash lending capacity by $850 billion.
Negotiations to find a middle ground have failed, with three White House meetings yielding no agreement. Banks are pushing for limits on when yield can be paid, while crypto firms like Coinbase, supported by a social media post from President Trump, advocate for users' right to "earn more money on their money." With talks now expected to move back to the Senate, both sides appear entrenched in their positions.
Trump Veto Ultimatum Adds Major Political Hurdle
Compounding the legislative gridlock, President Donald Trump issued an ultimatum on Sunday, stating he would not sign any legislation into law until Congress passes the SAVE America Act, a voting ID bill. This pledge effectively freezes progress on all other legislative items, including the crypto bill, a bipartisan housing bill, and funding for the Department of Homeland Security.
The move introduces a significant political obstacle that is independent of the stablecoin debate. The crypto bill requires 60 votes to pass the Senate, meaning it needs bipartisan support. Trump's declaration complicates an already fragile political calculus, with the legislative clock ticking before midterm election campaigns consume lawmakers' attention.
Coinbase's 20% Stablecoin Revenue Hangs in Balance
For companies like Coinbase, the stakes are enormous. The stalled bill would provide much-needed regulatory clarity by likely placing most crypto market oversight under the Commodity Futures Trading Commission (CFTC), an agency considered more industry-friendly than the Securities and Exchange Commission (SEC). The SEC has actively pursued legal action against major crypto companies for alleged securities law violations.
Stablecoins have become a vital revenue stream for Coinbase, accounting for about a fifth of its total revenue in the fourth quarter, more than double the proportion from the same period in 2024. The bill's failure would leave Coinbase and other industry players exposed to ongoing legal challenges and regulatory uncertainty, potentially hindering growth and investor confidence.
