Crypto Companies Backed by Trump Face Setback as Key Legislation Postponed

Crypto Industry Faces Uncertainty as Stablecoin Legislation Stalls

Photographer: Gabby Jones/Bloomberg

Initial enthusiasm within the cryptocurrency sector following Donald Trump’s return to office is beginning to wane. The mood has shifted to concern after a highly anticipated digital asset bill was postponed in the Senate, largely due to heated discussions over how stablecoins should be regulated.

The Senate Banking Committee decided to delay its review of the bill on Wednesday, shortly after Coinbase Global Inc. withdrew its endorsement of the latest draft. A major point of contention for Coinbase and other crypto companies is the proposed restriction on offering yield or rewards to customers holding stablecoins.

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Stablecoins have become a fundamental component of the digital asset ecosystem, with their popularity surging since the US introduced regulations for them in July. Despite their role in supporting Trump’s campaign and the passage of the stablecoin bill, industry leaders now worry that ongoing disagreements over dollar-pegged tokens could leave the US regulatory landscape lagging behind other countries.

Dea Markova, policy director at Fireblocks, a crypto custody provider, commented, “The delay is troubling because it increases the likelihood that the US will remain one of the few major digital asset centers without comprehensive capital markets regulations by 2026.”

Photographer: Gabby Jones/Bloomberg

The most recent draft of the legislation proposes a ban on paying yield for stablecoins, though certain types of rewards might still be permitted. Nana Murugesan, a former Coinbase executive, noted that the specifics regarding which rewards would be allowed remain unclear.

For years, crypto platforms have used yield and rewards to encourage users to keep their digital assets invested rather than converting them to traditional currency. Some tokens, such as Ethena’s USDe, even integrate yield directly into their design.

Coinbase, for example, provides incentives to customers who hold USDC, a stablecoin issued by Circle Internet Group Inc., offering returns similar to those of conventional savings accounts.

Ari Redford, head of policy and government affairs at TRM Labs, explained, “Rewards for stablecoins intersect with payments, savings-like behaviors, and market incentives. That’s why a seemingly technical detail has become a major policy issue as the bill is debated.”

Industry executives warn that restricting these rewards could put US-based crypto firms at a disadvantage compared to their international counterparts.

Debate Over Stablecoin Rewards Intensifies

Murugesan remarked, “When regulations are ambiguous, they’re open to interpretation. Any limitations are likely to hurt US companies, while overseas firms may continue offering rewards without restriction.”

Banks have expressed concern that stablecoins offering yields could draw deposits away from traditional financial institutions. Legislation passed last year now allows banks to issue their own stablecoins, prompting several crypto companies to seek bank charters. This law, known as the Genius Act, prohibits stablecoin issuers from paying interest.

Coinbase’s swift response—despite being among the donors for Trump’s planned White House ballroom—demonstrates the industry’s growing influence in Washington. CEO Brian Armstrong, a Trump supporter, announced on X that he was withdrawing support for the bill’s latest version due to “too many issues.”

Senator Cynthia Lummis, a member of the committee, responded on X by saying that such reactions from crypto firms “prove they just are not ready.”

With reporting by Emily Nicolle.

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