Crypto Companies Lifted by Trump Hit Hard as US Bill Postponed

Concerns Rise in Crypto Industry Over Delayed Stablecoin Bill

The early excitement surrounding cryptocurrencies during Donald Trump’s first year is now fading, replaced by a sense of worry. This shift comes after the Senate postponed a crucial digital asset bill amid intense discussions on stablecoin regulations.

On Wednesday, the Senate Banking Committee decided to hold off on assessing the bill shortly after Coinbase Global retracted its support for the latest iteration. Key aspects of the proposal that have sparked objections from Coinbase and other firms include restrictions on providing rewards and yields for stablecoin users.

Stablecoins play a vital role in the crypto landscape, and their usage has surged since the U.S. put a regulatory framework in place in July. Following a time of political influence during Trump’s election and a successful stablecoin law, many industry leaders now fear that the stalemate regarding dollar-pegged tokens may hinder the U.S. from keeping pace with international markets.

Dia Markova, from crypto asset management firm Fireblocks, expressed her concerns about this delay. “It raises the alarming possibility that by 2026, the U.S. might stand out as one of the few major digital asset centers without clear capital market regulations,” she noted.

As a direct effect of the uncertainty, Coinbase’s stock dipped by about 4%, and other companies, like Circle Internet Group and Gemini Space Station, saw declines of approximately 5%.

Current proposals indicate that while yield payments on stablecoins might be banned, certain types of rewards could potentially be permitted. However, Nana Murugesan, a former top executive at Coinbase, mentioned that the regulations surrounding these rewards remain murky.

Cryptocurrency firms have traditionally attracted users through yields and incentives, encouraging them to retain their digital assets as opposed to converting them back to traditional currency. Some tokens, such as Ethena’s USDe, include yield as an intrinsic feature.

Coinbase intends to reward customers for holding Circle’s USDC stablecoin, resembling the benefits seen in regular savings accounts.

Ari Redford, policy lead at TRM Labs, mentioned the significance of “stablecoin rewards” in linking payments with saving behaviors and market incentives. This intersection highlights why these seemingly narrow technical details have become essential as the bill evolves.

Several industry executives argue that constraints on such compensations may place U.S.-regulated crypto firms at a disadvantage. Murugesan pointed out that, “When regulations lack clarity, they become open to interpretation.” He added, “Any restrictions might inadvertently penalize U.S. companies while offshore competitors continue to provide compensation.”

The banking sector has voiced concerns that high-yield stablecoins might draw deposits away from traditional financial institutions. Following last year’s approval of a bill allowing banks to create their own stablecoins, various crypto entities have sought banking licenses. Notably, the law forbids stablecoin issuers from offering interest, known as the Genius Act.

Coinbase’s swift reaction to the bill highlights how the crypto industry is exerting its influence in Washington. Brian Armstrong, the CEO of Coinbase and a Trump supporter, stated on X-Post his decision to withdraw support due to “too many issues” in the latest provisions.