Coinbase (NASDAQ:COIN) will be a big beneficiary of the CLARITY Act, and with reports indicating the legislation will move to markup as soon as May 11, shares of the everything exchange are moving higher. As was recently reported, a deal has been agreed upon regarding stablecoin yield. Coinbase, as it offers a broad range of financial services, including digital assets, stablecoins, and more, foreshadows the future of how retail and corporate clients interact with digital finance.
Coinbase Chief Legal Officer Paul Grewal messaged his support of the language regarding stablecoin rewards in a post on X:
“Judging by my feed, the rewards language released last night was either a complete giveaway to Coinbase, a complete capitulation by Coinbase to the banks, or had nothing whatsoever to do with Coinbase. I’d say that means it’s the right language. Onward.”
Grewal previously stated the outcome regarding stablecoin rewards “preserves activity-based rewards tied to real participation on crypto platforms and networks, which is what the bank lobby said they wanted. We’ve long believed that this issue did not warrant legislative changes. But whatever– we’re focused on getting a bill done and are satisfied that this language should not be the basis of any objection.”
While the complete language of the bill is not yet available, it has been widely reported that the language outlines the following structure for stablecoin yield.
- Stablecoin Yield: Prohibits stablecoin issuers/platforms from offering rewards that are “economically or functionally equivalent to the payment of interest”.
- Permissible Rewards: Permits reward programs that are tied to “bona fide platform activity” or “activity-based participation” ( for example, using coins for transactions).
- Regulatory Action: Directs regulators to establish a disclosure framework and a catalog of permissible reward activities.
The compromise breakthrough still has a Congressional journey ahead, as it must be resolved with the Senate Ag Committee and then complete a full Senate vote. The House and Senate versions must also be aligned before it makes its way to the White House to be signed into law.
While the entire process was laborious and should have moved faster, the legislation is the most impactful regulatory change since the ’33 Act. The CLARITY Act could also become the vector for greater domination by the US in the global financial services sector – a key industry for the country. Other countries are watching the legislation closely, and many will align their own rules with the outcome of the US rules.
While Coinbase, the largest crypto exchange in the US, will be a huge beneficiary over time, other digital asset firms will benefit as well. Banks, too, could benefit if they decided to ignore their fear of change and regulatory blinders.