Who Really Wins in the Bank vs. Crypto Battle: Stakeholders Amid Stablecoin Yield Controversy

The true basis of the confrontation on Capitol Hill is not just the between two industries. It is about who controls the digital benefits for consumers, and how affiliated platforms like Coinbase continue to offer rewards amidst heated lobbying campaigns. The long-standing clash between the banking sector and the cryptocurrency industry sends a clear message: there is no simple solution amid billions of dollars in interests.

In recent weeks, the debate over stablecoin yield — where cryptocurrencies designed to maintain a fixed value offer returns to their holders — has become the focus of a major policy happening in the Senate. Banks have exerted pressure, claiming that such rewards directly compete with their deposit business model. However, cryptocurrency firms and their affiliates argue that it is simply a way to provide benefits to their customers, with no direct competition to traditional banking deposits.

The Real Battlefield: Affiliates and Third Parties in the Stablecoin Reward Economy

The underlying question is: why does the law need to protect the ability of affiliates to offer rewards? The answer depends on how we understand the difference between stablecoin issuers and platforms that offer rewards through staking, lending, or other activities.

Last year, the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act was enacted, setting a compromise: stablecoin issuers cannot directly pay yields to their holders. But — and this is the critical part — affiliates like Coinbase, CircleCI, and other third-party platforms can still offer rewards based on user activity.

This is the benefit that crypto lobbyists seek to protect. The American Bankers Association has argued that this poses a major threat to the entire financial system. But others see it as a simple market share battle.

GENIUS Act vs. Senate Market Structure Bill: How Do Crypto Rewards Get Compromised?

This month, the Senate Banking Committee released a new draft of the Digital Asset Market Clarity Act, which still bears the same name as the House version. This law is expected to be considered for a vote this week.

The change originated here: Instead of outright banning stablecoin rewards, the new proposal compromises. Stablecoins can offer rewards — but only if they are static, similar to a savings account model. Any rewards generated from active transactions or staking activity are still permitted.

This is a partial victory for the cryptocurrency industry and the affiliated platforms that depend on this business model. Kara Calvert, Vice President of US Policy at Coinbase, emphasized that the signal is not about market structure, but about the lobbying power of large financial institutions.

The Secret Strategy of Affiliate Platforms: How Do They Bypass the Yield Ban?

Ecosystem affiliates have found many ways to continue offering rewards despite restrictions. Coinbase, for example, can share part of the benefits received from Circle (the USDC issuer) as interest from reserved funds backing the stablecoin.

Corey Frayer, a former crypto adviser to SEC Chair Gary Gensler and currently with the Consumer Federation of America, says the actual impact of the yield ban is limited. “The main way to fund yields is through staking and lending activities, which are explicitly excluded from the yield ban,” he said. This reflects the earlier version of the GENIUS Act, which the banking sector has attempted to revise nine times.

As parties continue discussions, Wall Street lobbyists remain at the negotiation table, and the previously compromised agreement has become a battleground for various efforts to change it.

Why Do Banks Withhold Real Market Concerns?

The most significant argument from the banking sector concerns community banker deposits. The American Bankers Association warns that cryptocurrency rewards could cause “trillions of USD delays in local lending.”

But cryptocurrency advocates respond that this argument is deeply flawed. “We know that these rewards programs and balances do not compete with deposit products,” Calvert said. The detail is: cryptocurrency firms do not use customer funds to earn their own interest, unlike banks. So, the comparison is turned upside down.

This irony was also highlighted by Coinbase CEO Brian Armstrong last month. He threatened that his company, which reported $355 million in profits related to stablecoin revenue last quarter, would not support any law that grants leniency to bankers and slows down affiliates from offering customer rewards.

The Future of the Law and the Role of Affiliates in the Final Version

The debate is still ongoing today. The Senate Banking Committee is preparing amendments that members may consider during the markup hearing. The second step is the Senate Agriculture Committee, which postponed its own markup until the end of the month.

If both committees pass a law, it still needs to be reconciled into an agreed-upon version before a full Senate vote. Throughout the process, the role of affiliates will be critical. They are at the heart of real negotiations — platforms that stimulate rewards, third-party providers offering services, and partnerships launching new use cases.

Summer Mersinger, CEO of the Blockchain Association, has concluded: if bankers can ensure that the law is defeated through unreasonable demands, it will only leave the status quo — a result they themselves have fully rejected as unacceptable for the industry. The battle-ready stance is instead that every step on Capitol Hill is prepared.

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