Catenaa, Wednesday, August 06, 2025- Coinbase and PayPal are moving ahead with stablecoin reward programs, defying the spirit of new US legislation that bans yield for stablecoin issuers.
The GENIUS Act, signed last month, bars stablecoin issuers from paying interest or yield to holders in an effort to classify the tokens as payment tools rather than investment products.
Coinbase and PayPal argue they are not bound by the rule because they do not directly issue the tokens they reward.
Coinbase currently offers 4.1% annual rewards on USDC holdings, while PayPal provides 3.7% on PYUSD balances through its platforms.
Coinbase stopped co-issuing USDC with Circle in 2023, and PayPal’s PYUSD is issued by Paxos. Both firms insist that their programs constitute rewards rather than interest payments.
The stance has reignited debate in Washington. Critics, including Sen. Elizabeth Warren, warn that private stablecoin programs could increase systemic risk and erode privacy.
Proponents say rewards help drive adoption and keep U.S. firms competitive as global demand for stablecoins grows.
Interest from corporations like Amazon, Walmart, JD.com, and Alipay shows the market’s momentum. Remittance firms such as Western Union are also testing stablecoin-powered transfers, citing potential for lower fees and improved access in volatile currency markets.
The stablecoin sector, now worth roughly $250 billion, could swell to $2 trillion within years, according to Ripple CEO Brad Garlinghouse, even as regulatory pressure mounts.
