Coinbase and PayPal have managed to maintain their stablecoin rewards programs even with the restrictions imposed by the US GENIUS Act. These programs are framed as non-interest incentives.
Coinbase and PayPal's Strategic Response to GENIUS Act
Coinbase and PayPal continue offering rewards on stablecoins despite restrictions imposed by the US GENIUS Act aimed at prohibiting such offerings. Following the Act's enactment on July 18, 2025, both firms maintained programs promising annualized returns of 3%-5%. However, the Act regulates only stablecoin issuers and does not limit secondary market activities like those of Coinbase and PayPal.
Coinbase CEO Brian Armstrong clarified during an earnings call that the company's USDC rewards are structured as non-interest incentives. PayPal similarly justifies its PYUSD returns through third-party partnerships. Such programs remain legal under current interpretations, emphasizing rewards rather than interest.
> "Coinbase does not issue USDC and structures rewards as non-interest incentive programs." — Brian Armstrong, CEO, Coinbase.
Regulatory Impact on Stablecoin Market
Market players view these rewards as regulatory loopholes. No significant statements have emerged from major crypto figures on this topic, though public discourse persists with legal experts asserting compliance. The interpretation of the Act suggests it sidesteps secondary market 'reward' programs unless subsequent regulations specifically target them.
Future Regulatory Prospects
Industry analysts expect the GENIUS Act to shift stablecoin products toward compliant platforms. More regulations are anticipated within 6–18 months, influencing financial, regulatory, and technological strategies. For instance, when Coinbase discontinued USDC lending in 2021, market dynamics shifted toward DeFi platforms, but regulations now favor compliant tokens, hinting at similar trends ahead.
Thus, Coinbase and PayPal continue to adapt their reward models in the face of changing legislation, highlighting the volatile nature of regulation in the cryptocurrency space and the anticipation of further legislative measures.
