In recent weeks, new legislation in the U.S. regarding stablecoins has drawn investor attention, proving to be favorable for major platforms like Coinbase and PayPal.
Status of the New Stablecoin Legislation
The GENIUS Act, signed into law last month, legalizes the use of stablecoins in the U.S. but imposes strict conditions. Recent reports from Wu Blockchain highlight a potential ban on offering interest on stablecoins, yet platforms continue to provide rewards around 4% for USDC and 3.7% for PYUSD, claiming they are not actual issuers of these stablecoins, but rather their rewards stem from platform revenue sharing.
Coinbase Finds a Legal Loophole
Coinbase has confirmed the continuation of its rewards program, stating that under the GENIUS Act, they are not the issuer of USDC. CEO Brian Armstrong emphasized that the firm doesn't offer interest but provides rewards that allow them to legally offer up to 4-5% annual yield on USDC deposits. This strategic differentiation has made them attractive to investors.
PayPal Keeps Its Rewards Program Alive
PayPal has also advanced its rewards program, offering annual returns of 3.7-5% on PYUSD holdings. Although PYUSD is technically issued by Paxos and not by PayPal, this distinction allows the platform to continue rewarding users without violating GENIUS Act restrictions. This feature plays a key role in fostering user loyalty and attracting more customers.
Thus, while the GENIUS Act restricts stablecoin issuers from paying yields, companies like Coinbase and PayPal have found legal pathways to continue rewarding their customers.
