Stablecoin yield compromise protects exchange rewards
The compromise in the stablecoin legislation allows third-party intermediaries to offer rewards tied to user activity, preserving a key revenue and engagement driver for platforms like Coinbase.
The argument
The guest explained that while direct issuer-paid yield remains banned to appease banks worried about deposit flight, the 'activity-based' loophole allows exchanges to continue incentivizing users, though the exact definition of 'activity' will be fought over during downstream rulemaking.
The thesis, stress-tested
✓ What validates it
- ✓Draft rules from regulators defining 'user activity' broadly to include basic platform interactions
- ✓Coinbase successfully launching new activity-based reward programs under the new framework
▸ Risks discussed
- ▸Restrictive downstream rulemaking by the OCC or other regulators that narrows the definition of 'activity'
- ▸Continued lobbying and obstruction by traditional banks seeking to protect their deposit moats
Hear it yourself
"So I I think, you know, given that we were able to get this negotiated compromise in such a firework y, last minute way, I think that's giving us optimism that although there are potholes, like, we could probably work those out too. Mhmm. But it's definitely not a given. I think in the Senate is still the big I mean, the one of the big ones to talk about is ethics. Right? The Democrats want some form of prohibition on government of government officials, elected officials, maybe their families, either launching, owning, profiting from, trading, endorsing, etcetera, cryptocurrencies."
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