šØ CLARITY Act Senate Markup Expected Second Half of April, Potential Passage by MayāCoinbase Warns Ban on Passive Stablecoin Yield Could Hit $1.35B Revenue
CLARITY Act set for Senate markup in second half of April with potential passage by May per Coinbase internal market view. Lawmakers reached agreement in principle March 20 followed by new compromise March 24 proposing banning passive stablecoin yield while allowing limited activity-based rewards. In 2025 Coinbase and Circle generated around $2.75B from reserves backing USDC with Coinbase's share roughly $1.35B close to one-fifth of its total revenue. Chief Legal Officer Paul Grewal warned vague language today could give future regulators too much power to reinterpret rules. Coinbase working on coordinated counterproposal to keep reward models viable while aligning with regulation. White House adviser Patrick Witt: move now or risk losing window entirely.
š Key Points:
š¹ April-May Timeline: Coinbase internal market view reveals Senate markup expected second half of April with potential final passage by May if lawmakers maintain current momentum; accelerated timeline creates urgency for industry stakeholders; agreement in principle reached March 20 followed by new compromise March 24
š¹ Passive vs Activity-Based Yield Framework: Latest proposal bans passive stablecoin rewards (users won't earn just by holding) while allowing limited incentives tied to actual usage like payments; creates subjective distinction between "passive" and "activity-based" that could lead to compliance uncertainty and regulatory interpretation disputes
š¹ $1.35B Coinbase Revenue at Risk: In 2025 Coinbase and Circle generated around $2.75B from reserves backing USDC; Coinbase's share roughly $1.35B representing close to one-fifth of its total revenue; if passive yield disappears that revenue stream takes direct hit; Coinbase also takes sizable cut from staking rewards around 35% on major assets showing how central yield-based income is to business
š¹ Grewal's Future Regulator Concerns: Chief Legal Officer Paul Grewal warned vague language today could give future regulators too much power to reinterpret rules; "My memory is a little better than to trust future rogue regulators to faithfully apply the law"; Coinbase working on coordinated counterproposal to keep reward models viable while still aligning with regulation
š¹ Jamie Dimon vs Brian Armstrong Clash: Tensions not just regulatory but also institutional; Jamie Dimon and Brian Armstrong reportedly clashed over stablecoin economics even as both firms maintain working partnership; White House adviser Patrick Witt made urgency clear: move now or risk losing window entirely; demonstrates high-stakes nature of negotiations
š Why It Matters:
š¹ One-Fifth of Coinbase Revenue Threatened: $1.35B USDC reserve income representing ~20% of total Coinbase revenue creates existential business model threat if passive yield banned; forces Coinbase to either accept revenue hit, restructure rewards as "activity-based," or oppose legislation risking broader regulatory framework; demonstrates how crypto platform economics built on yield generation vulnerable to policy changes
š¹ Vague Language as Future Power Grab: Grewal's warning about "future rogue regulators" reinterpreting rules highlights fundamental tension in crypto regulation; current administration may apply rules favorably but future hostile regulators could weaponize ambiguous language; Coinbase seeking tighter legislative language limiting regulatory discretion versus principles-based framework giving agencies flexibility
š¹ Activity-Based Distinction Enforcement Challenge: Distinguishing "passive" yield (holding) from "activity-based" rewards (payments) creates subjective boundary regulators and courts will define through enforcement; Coinbase likely to test limits by structuring rewards as tied to minimal activity; precedent-setting cases will shape industry practices for years
š¹ Window Closing Creating Legislative Pressure: Witt's "move now or risk losing window entirely" reflects political reality that pro-crypto Congress may not last; compressed timeline forces industry to accept imperfect deal rather than hold out for better terms; tactical calculation whether to support flawed legislation versus risk no legislation at all
šÆ Bottom Line:
CLARITY Act Senate markup expected second half of April, potential May passageānew compromise bans passive stablecoin yield but allows activity-based rewards; Coinbase warns $1.35B revenue (one-fifth of total) at risk; Grewal concerned vague language empowers future hostile regulators.
https://coinpedia.org/news/clarity-act-news-senate-markup-set-for-april-as-coinbase-fights-to-save-1-35-billion-in-revenue/