Coinbase (NASDAQ: COIN) is warning Congress not to mess with its stablecoin revenue, while South Korea’s stablecoin legislation has hit yet another snag.
On New Year’s Eve, Crypto in America reported that the Senate Banking Committee would hold a markup session for its digital asset market structure legislation (the Responsible Financial Innovation Act (RFIA)) on January 15. That date has yet to be confirmed, nor is there any indication that some kind of consensus has been reached between Banking’s GOP leadership and the minority Democratic Party membership on what a revised RFIA should look like.
Among RFIA’s numerous (at present) unresolved issues is the question of whether to include language that would revise the stablecoin-focused GENIUS Act to explicitly prohibit non-issuers of stablecoins—including digital asset exchanges like Coinbase—to offer ‘rewards’ to customers holding stablecoins on their platforms.
Roughly one-fifth of total revenue in Coinbase’s most recent earnings report came from customers holding the USDC stablecoin issued by Circle (NASDAQ: CRCL), Coinbase’s former USDC partner. As such, Coinbase stands to lose bigly if Congress sides with the traditional banks that are pressing for a GENIUS revision in market structure legislation.
On December 26, Coinbase CEO Brian Armstrong tweeted a response to a tweet showing how banks are earning big bucks on customer deposits while kicking only a fraction of that green back to their customers. Armstrong vowed that Coinbase “won’t let anyone reopen GENIUS. Red line issue for us.”
(Armstrong’s potential retaliation against elected officials who dare cross his ‘red line’ would almost certainly come in the form of millions of campaign financing dollars aimed at overthrowing incumbents, or backing primary campaigns aimed at electing more pliant pols. These targets would almost certainly be Democrats, reinforcing the mantra of crypto as a politically partisan issue.)
On December 30, Coinbase’s chief policy officer Faryar Shirzad tweeted his thoughts on a Bloomberg article detailing China’s plans to start paying interest to holders of its digital yuan, a central bank digital currency (CBDC), on January 1. Chinese media reported that the People’s Bank of China (PBoC) was taking this step to “adapt to the new demands of the real economy and the financial system for the issuance, circulation, and use of the digital RMB.”
Shirzad called the PBoC announcement “sobering and timely,” adding that reopening GENIUS to eliminate the paying of stablecoin rewards “could hand our global rivals a big assist in giving non-U.S. stablecoins and CBDCs a critical competitive advantage at the worst possible time … it’s critical for negotiators to protect the primacy of the U.S. dollar and the U.S. financial system, not just incumbent interests.”
In a separate tweet-thread, Shirzad hailed the regulatory breakthroughs that stablecoins had enjoyed in 2025 and claimed that “the big fault lines of 2026 won’t be left v. right, but incumbents v. challengers and, in many instances, central banks v. elected officials.” Armstrong added his $0.02 to Shirzad’s views, saying “U.S. stablecoins must remain competitive on a global stage.”
It’s perhaps worth noting that Coinbase recently announced plans to eliminate its users’ ability to earn stablecoin rewards unless they signed up for the Coinbase One subscription service, the lowest tier of which costs $4.99 per month (the ‘preferred’ tier costs $29.99/month while the ‘premium’ tier costs $299.99).
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South Korea stalls
Stakeholder squabbles are also complicating South Korea’s plans to pass stablecoin legislation. In December, the country’s Financial Services Commission (FSC) missed its deadline for submitting a draft of the proposed Basic Digital Asset Act to the National Assembly’s Political Affairs Committee.
On December 30, Yonhap News reported that the draft’s arrival had been “postponed until next year” to give the FSC time to work out its differences with the Bank of Korea (BoK). The primary point of contention is whether stablecoin issuers should be 51% controlled by registered financial institutions (as the BoK prefers) or whether commercial entities, including many of the country’s tech giants, will be given more freedom to operate independently of the banks (the FSC’s preferred outcome).
The BoK is also in favor of setting up a ‘unanimous agreement body of relevant organizations’ to oversee stablecoin issuance, while the FSC reportedly sees no need to establish a new regulatory body.
Another unresolved issue involves how great an initial equity capital requirement stablecoin issuers should be required to establish, with sums ranging from KRW500 million ($347,000) to KRW25 billion ($17.3 million). Whether to separate the functions of stablecoin issuance and distribution from digital asset exchanges has yet to be decided.
The proposed legislation would prohibit stablecoin issuers from offering interest to token holders. It would also prohibit the use of international stablecoins like USDC and Tether’s USDT unless the companies behind these tokens agree to establish South Korean offshoots and submit to local supervision.
While an FSC official told Yonhap that the agency was “discussing all possibilities with an open mind,” the impasse has reportedly convinced the ruling Democratic Party of Korea’s Digital Asset Task Force to start prepping its own stablecoin plans based on legislation previously submitted by various lawmakers.
Other aspects of the Basic Digital Asset Act include a potential reauthorization of initial coin offerings (ICOs) after they were banned in 2017 following a series of scams that cost South Koreans millions.
Meanwhile, a stablecoin payment ‘demonstration project’ for foreigners closed on December 23, with South Korea’s largest payment processor BC Card hailing the two-month trial as paving the way for a “Korean-style stablecoin payment infrastructure” that “aligns with domestic systems.”
For the trial, BC Card teamed with South Korean blockchain finance firm Waybridge, ‘overseas’ digital wallet company Aaron Group and similarly ‘overseas’ fintech firm Global Money Express (all of which are led by Korean nationals).
The trial involved international visitors converting “overseas stablecoins” to digital prepaid cards affiliated with BC Card. These digital cards could be used at local merchants using only QR codes, without the need for a physical card or currency exchange intermediaries.
BC Card CEO Choi Won-seok said his company “will gradually prepare a stablecoin payment model that aligns with the domestic legal and institutional environment.” BC Card is also “strengthening partnerships with major financial institutions, fintechs, and virtual asset operators and focusing on building a general-purpose stablecoin payment infrastructure necessary to revitalize the domestic stablecoin market.”
Meanwhile, BC Card is “actively securing infrastructure competitiveness based on intellectual property rights, such as by continuously applying for patents for core technologies, such as data processing technology that calculates reasonable exchange rates between fiat currency and stablecoins when making stablecoin payments.”
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Circle slams fake news, hails real news
On Christmas Eve, Circle tweeted a holiday ‘public service announcement’ in which it reminded consumers that “tis the season for scammers.” Without offering specifics, it noted that “major announcements about Circle products will always be posted to Circle’s main X handles and on our official website.” Circle warned users to “verify the legitimacy of requests before taking action, especially when asked to connect your wallet.”
The tweet was reportedly sparked by some fake PR issued earlier that day promoting ‘CircleMetals,’ a supposed new service enabling swaps between USDC and tokenized gold and silver. The PR directed users to a website where they were instructed to connect their digital wallets to not only swap their USDC but also claim ‘rewards’ of a nonexistent token called CIRM.
In actual Circle news, December 18 saw accounting/tax firm Intuit announce that it had entered into a “multi-year, strategic partnership” with Circle to “leverage Circle’s comprehensive stablecoin infrastructure and USDC across the Intuit platform.”
Intuit’s products include the TurboTax and QuickBooks software, and CEO Sasan Goodarzi said the Coinbase partnership “will expand our capabilities to layer stablecoins onto Intuit’s trusted platform as we put money at the center of everything we do.”
Circle CEO Jeremy Allaire duly logrolled back, saying Intuit was “an ideal platform to extend the speed, power and efficiency of USDC for everyday financial transactions.”
The following day, Swiss ‘buy now, pay later’ firm Klarna, which recently announced plans to launch its own dollar-backed stablecoin (KlarnaUSD, currently in testnet on Stripe’s Tempo chain), announced a new partnership with Coinbase to “add stablecoin funding to its broad range of traditional sources of funding, which include consumer deposits, long-term loans and short-dated commercial paper.”
Klarna said it will “raise short-term funding from institutional investors denominated in USDC utilizing Coinbase’s digitally native infrastructure.” The idea is to permit Klarna to “access USD-like funding directly, tapping into a new pool of institutional investors.” Klarna stressed that this endeavor “is separate from Klarna’s consumer- and merchant-focused crypto and stablecoin endeavors.”
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PayPal extending PYUSD’s reach
PYUSD, the stablecoin launched in 2023 by payment processing giant PayPal (NASDAQ: PYPL), saw its market cap slip by nearly $300 million in the final week of December. But PYUSD enjoyed serious gains in 2025, closing out the year with a cap of $3.6 billion, up from just $500 million last January.
Last month, PayPal struck a deal with the YouTube video platform that will allow content creators with monetized accounts to receive payments in PYUSD. For the moment, the PYUSD payout option is limited to U.S. users.
YouTube previously allowed users to both pay for services and receive payments via PayPal’s fiat channels, so the PYUSD deal may have been in the works for some time. PayPal’s head of crypto May Zabaneh told Fortune that “the beauty of what we’ve built is that YouTube doesn’t have to touch crypto and so we can help take away that complexity.”
PayPal later announced plans to integrate PYUSD into USD.AI, “a synthetic dollar protocol designed to finance the physical infrastructure of AI.” USDai, which assists financing efforts by smaller AI firms, “functions like a high-yield bond index tied to income-generating infrastructure equipment.”
PayPal CEO Alex Chriss told Fortune that his company was “constantly thinking about how to disrupt yourself … “If you were to build the payments ecosystem from scratch today, it wouldn’t look like the way it does today. You would start to use some sort of blockchain, or some sort of thing that probably looks a lot like stablecoins.”
Chriss stressed that the company’s stablecoin efforts weren’t some touristy whim. “Crypto within PayPal as a priority is top down. It’s being led by me. I’m making sure that crypto is top of mind and something that we’re investing in as a company.”
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Source: https://coingeek.com/coinbase-warns-congress-not-to-cross-its-stablecoin-red-lines/
