Coinbase and PayPal Continue to Issue Stablecoin Rewards in Response to GENIUS Act Regulatory Controversy

On August 5, Decrypt reported that Coinbase CEO Brian Armstrong stated during last Thursday's earnings call that the company will continue to offer USDC holding rewards to users, calling the program a key differentiator in attracting users.

Although the GENIUS Act prohibits stablecoin issuers from paying interest or returns, Armstrong clarified, "We are not an issuer, and we pay rewards, not interest." Coinbase currently offers US users a 4.1% annualized yield on USDC deposits.

The bill only targets issuers, such as USDC issuer Circle, and does not prohibit exchanges from offering rewards. A Senate staffer explained that the bill is intended to prevent stablecoins from being treated as traditional deposit instruments.

PayPal is also pursuing a similar strategy, offering a 3.7% annualized yield to users holding its stablecoin, PYUSD, to attract more customers.