Third Model: Coinbase and Banks in the Fight for Stablecoin Control Reward

The relationship between crypto companies and traditional financial systems has reached a critical point. At the heart of the discussion is the third model of financial competition—where crypto platforms interact directly with consumers instead of acting as intermediaries for banks.

Coinbase is actively opposing measures that could limit its ability to reward users who save stablecoins. The exchange has signaled that it may withdraw support for legislative proposals if the CLARITY Act or other regulations hinder this program.

The Heart of the Debate: USDC and Coinbase ONE Rewards

The intersection of the framework in the crypto market directly responds to this third model. Coinbase offers a 3.5% reward to users earning interest from USDC reserves through a subscription to Coinbase ONE. This stablecoin is dollar-backed and issued by Circle, a well-known digital asset firm.

The revenue from this program has reached $355 million in the past quarter, helping Coinbase during periods of low trading volume. For retail users, this reward means higher returns than traditional savings accounts.

Why Banks Are Opposing the Third Model

Traditional financial institutions have warned legislators that these yield programs are diverting deposits away from the banking system. According to their argument, this could harm small businesses, farmers, and homebuyers by reducing the funds available for community lending.

Banks earn approximately $360 billion annually from deposits at the Federal Reserve and card transaction fees. This third model of competition directly threatens this income.

Coinbase, through its Chief Policy Officer Faryar Shirzad, has countered this argument. The company stated that independent research from Cornell University shows that stablecoin adoption does not actually reduce bank lending. Instead, rewards need to reach 6% or higher to have a significant impact on deposits.

The Compromise: Limiting to Licensed Institutions

While the Trump administration supports broader crypto legislation, disagreements over the third stablecoin yield model have begun to weaken bipartisan support.

Some lawmakers have considered a compromise: allowing only companies with bank charters to offer rewards. Five crypto firms—including Circle, Ripple, and BitGo—received conditional approval last year to become federally chartered trust banks.

But even with this solution, companies are likely to seek alternative ways to reward users for holding digital assets with them.

Win or Lose? Where the Market Focuses

Support for the bill is uncertain. On Polymarket, traders assign a 68% probability that the comprehensive crypto market structure bill will pass this year, while on Kalshi, it’s at 70%. Traders recognize that the third model of regulatory compromise could change the dynamics of the entire proposal.

The Senate plans to review this bill later this week, and the language regarding stablecoin yield accounts has become a central point of discussion. The outcome will show whether the crypto sector’s financial innovation can achieve a balance with the concerns of the traditional sector.