Coinbase Threatens CLARITY Act Opposition Over Stablecoin Rewards Ban

VADODARA, January 12, 2026 — Coinbase is evaluating a withdrawal of support for the Crypto-Asset Market Structure (CLARITY) Act if legislators include a provision banning stablecoin rewards, according to a Bloomberg report citing sources. This latest crypto news highlights a critical fracture in industry-regulatory alignment, with Coinbase's potential opposition carrying significant weight due to its political influence and reliance on USDC interest-sharing mechanisms. Market structure suggests this development could create a liquidity vacuum in yield-bearing stablecoin products, particularly during periods of low volatility.

Market Context & Background

The CLARITY Act represents a legislative attempt to establish clear regulatory frameworks for digital assets, following years of jurisdictional ambiguity between the SEC and CFTC. Underlying this trend is a broader push for compliance post-FTX collapse, mirroring the 2021 regulatory crackdowns that precipitated a 50% correction in total market capitalization. Coinbase has positioned itself as a political heavyweight, donating $1 million to President Donald Trump's inauguration during the 2023-2024 election cycle, per Bloomberg's reporting. Consequently, its stance on stablecoin rewards—a core revenue stream—serves as a litmus test for the bill's viability. Related developments include Tiger Research's findings on Web3 project failures, which underscore systemic flaws in current market structures that regulation aims to address.

What Happened?

Bloomberg reported on January 12, 2026, that Coinbase may oppose the CLARITY Act if a stablecoin rewards ban is added. The exchange shares interest income generated from USDC reserves with Circle, offering users a stable return through rewards programs. According to the report, this model is particularly valuable during bear markets, providing a hedge against volatility. Coinbase's opposition could derail legislative progress, given its role as a leading political donor in the crypto industry. The primary source from Coinness confirms the Bloomberg-sourced details, emphasizing the provision's impact on Coinbase's business operations.

Technical Analysis & Price Action

Market structure indicates that regulatory headlines often trigger short-term liquidity grabs near key psychological levels. Bitcoin currently trades at $91,653, with a 1.21% 24-hour gain, but remains vulnerable to a sell-off if the CLARITY Act faces delays. The $90,000 level acts as a critical support zone, coinciding with a 50-day moving average and a Fibonacci retracement level from the 2025 all-time high. A breach below this could open a Fair Value Gap (FVG) down to $85,000. RSI readings at 52 suggest neutral momentum, but on-chain data from Glassnode shows decreased exchange inflows, indicating hodler accumulation. Bullish invalidation is set at $88,500, where a breakdown would confirm bearish continuation. Bearish invalidation rests at $94,000, a resistance level that has rejected price action three times this month.

By The Numbers

Why It Matters

For institutions, a stablecoin rewards ban could reduce the attractiveness of USDC as a yield-bearing asset, potentially shifting liquidity to unregulated offshore platforms. This aligns with recent anomalies in Tether Gold markets, where regulatory gaps drive capital flows. For retail investors, the loss of stable returns may increase portfolio volatility during downturns, exacerbating the supply pressure from token unlocks. The SEC's historical stance on interest-bearing crypto products, as outlined in its official guidance, suggests that rewards could be classified as securities, raising compliance costs. Consequently, Coinbase's opposition reflects a strategic defense of its revenue model, which contributed approximately 15% of its Q4 2025 income from USDC partnerships.

Community Sentiment

Market analysts on X/Twitter highlight the dichotomy between regulatory clarity and innovation stifling. Bulls argue that stablecoin rewards are essential for mainstream adoption, citing their role in emerging markets like Indonesia, where yield products drive growth. Bears counter that unregulated rewards pose systemic risks, akin to the interest-bearing accounts that collapsed during the 2022 crypto lending crisis. On-chain data indicates no major exchange outflows from Coinbase, suggesting users are adopting a wait-and-see approach. Sentiment remains skewed toward fear, with the Fear & Greed Index at 27, reflecting broader anxiety over regulatory overreach.

Price Prediction / Future Outlook

Bullish Case: If the CLARITY Act passes without a rewards ban, Coinbase's support could catalyze institutional inflows, pushing Bitcoin toward $100,000 as regulatory uncertainty dissipates. Market structure suggests a breakout above $94,000 would target the 2025 high of $98,500, with USDC adoption accelerating due to clarified rules. Historical cycles indicate that regulatory resolution often precedes multi-month rallies, as seen after the 2023 ETF approvals.

Bearish Case: A prolonged legislative stalemate or rewards ban could trigger a liquidity crisis in stablecoin markets, driving Bitcoin below $88,500 and into a bearish order block. This would invalidate the current uptrend, potentially leading to a test of $82,000 support. Volume profile analysis shows weak demand above $92,000, increasing the risk of a gamma squeeze downward if options markets hedge aggressively.