Coinbase Stablecoin Revenue Could Surge Sevenfold Under Proposed Genius Act, Though Draft Bill May Limit Yield Payments

Revenue tied to stablecoins at Coinbase could increase as much as seven times under the proposed Genius Act, according to reporting highlighted by Bloomberg. However, a draft version of the legislation may simultaneously restrict that growth by prohibiting yield payments to stablecoin holders.

The development, which has sparked debate across the digital asset sector, was also referenced in a post on X by Cointelegraph. The newsroom at hokanews independently reviewed the available reporting and legislative summaries before preparing this analysis.

At the center of the discussion is how new federal rules could reshape the economics of stablecoin issuance and distribution, particularly for major exchanges that rely on interest income generated from reserve assets.

Source: XPost

What the Genius Act Proposes

The Genius Act, a draft legislative proposal circulating in Washington, seeks to create a structured regulatory framework for stablecoin issuers operating in the United States. Stablecoins are digital tokens pegged to fiat currencies, most commonly the U.S. dollar, and are typically backed by reserve assets such as short-term Treasury bills and cash equivalents.

While specific provisions remain under negotiation, the bill reportedly includes measures aimed at:

Establishing licensing requirements for issuers
Mandating high-quality liquid reserve backing
Enhancing transparency and audit standards
Limiting certain forms of yield distribution to token holders

The potential ban on yield payments to stablecoin holders has drawn particular attention. Under current industry practices, issuers often generate income by investing reserves in low-risk government securities. Some platforms share portions of this yield directly or indirectly with users.

A prohibition on direct yield distribution could significantly alter business models across the sector.

Coinbase’s Stablecoin Exposure

Coinbase plays a prominent role in the stablecoin ecosystem, particularly through its partnership with issuers tied to U.S. dollar-pegged tokens. Stablecoin-related revenue contributes meaningfully to the exchange’s earnings, largely through interest income generated from reserve holdings.

In periods of higher interest rates, yield on short-term Treasury securities can be substantial. As a result, exchanges and issuers holding billions of dollars in reserves may earn significant income even without charging transaction fees.

Bloomberg’s reporting suggests that under a regulatory framework like the Genius Act, Coinbase’s stablecoin revenue could increase as much as sevenfold due to clearer legal status and broader institutional participation.

Clarity often attracts capital. If regulatory uncertainty diminishes, more corporations, financial institutions, and payment platforms may integrate compliant stablecoins into their operations.

The Yield Restriction Debate

However, the draft bill’s reported prohibition on yield payments introduces complexity.

Supporters of the restriction argue that banning yield sharing could prevent stablecoins from functioning like unregulated savings accounts. Regulators have long expressed concern that high-yield digital products may blur the line between payment instruments and investment vehicles.

By prohibiting yield distribution to holders, lawmakers may seek to reinforce stablecoins as transactional tools rather than speculative income products.

Critics, however, warn that restricting yield could reduce competitiveness against alternative digital dollar products offered offshore. Some industry participants contend that yield is a natural byproduct of reserve management and that transparent distribution aligns incentives between issuers and users.

The outcome of this debate could materially influence how stablecoins evolve within the U.S. financial system.

Regulatory Clarity and Institutional Adoption

One of the central arguments in favor of the Genius Act is that regulatory clarity could unlock institutional adoption at scale.

Large corporations and financial institutions often hesitate to engage deeply with digital assets due to uncertain compliance obligations. A federal framework could provide defined standards for reserve composition, disclosure, and operational oversight.

If institutions view regulated stablecoins as reliable settlement instruments, transaction volumes could expand significantly.

For Coinbase, greater stablecoin usage could translate into higher custody balances, increased trading activity, and expanded payment integration services.

Market Confirmation and Reporting

The analysis surrounding Coinbase’s potential revenue impact was first detailed by Bloomberg and subsequently highlighted through industry monitoring channels, including a post by Cointelegraph on X. The editorial team at hokanews reviewed the publicly available legislative draft summaries and reporting before compiling this article.

As legislative language continues to evolve, final provisions may differ from current drafts.

Broader Industry Implications

Stablecoins have grown into a foundational component of the digital asset economy. They facilitate trading, enable cross-border payments, and support decentralized finance applications.

Regulatory changes affecting yield distribution could reshape competitive dynamics between U.S.-based issuers and international alternatives.

If domestic rules prove overly restrictive, some liquidity could migrate offshore. Conversely, clear federal guidelines could enhance trust and expand mainstream adoption.

The balance between innovation and oversight remains central to the debate.

Revenue Multipliers and Risk Considerations

The projection of sevenfold revenue growth reflects optimistic assumptions about scale. If regulatory clarity leads to wider stablecoin integration across banking, commerce, and capital markets, reserve balances could increase substantially.

Because interest income is directly proportional to reserve size and prevailing rates, larger balances combined with sustained yields could generate exponential revenue growth.

However, this scenario depends on several variables:

Final legislative language
Federal Reserve policy trajectory
Competitive responses from other issuers
Global regulatory coordination

Additionally, a ban on yield payments to holders may shift more revenue retention toward issuers rather than users.

Investor Sentiment and Market Reaction

Markets often respond favorably to regulatory clarity. Coinbase shares and associated crypto assets have historically moved in response to major policy announcements.

While investors may welcome structured oversight, uncertainty during the drafting process could create interim volatility.

The interplay between revenue expansion potential and operational restrictions will likely shape market interpretation in the coming months.

The Future of Stablecoins in the United States

Stablecoins have evolved from niche trading tools into widely used digital settlement instruments. Policymakers increasingly recognize their systemic relevance.

The Genius Act represents one of the more comprehensive attempts to codify stablecoin operations within federal law.

If enacted with balanced provisions, the legislation could cement the United States as a global leader in compliant digital dollar innovation.

For Coinbase, the implications are substantial. A sevenfold increase in stablecoin revenue would materially influence earnings structure and strategic positioning.

However, limitations on yield distribution may redefine how value is shared between issuers and users.

Conclusion

The proposed Genius Act presents both opportunity and constraint for Coinbase and the broader stablecoin ecosystem.

Regulatory clarity could unlock exponential revenue growth and institutional integration. Yet draft provisions limiting yield payments may narrow certain monetization pathways.

As lawmakers refine the bill, market participants will continue evaluating how new rules reshape the economics of digital dollar issuance.

The coming legislative sessions may determine whether stablecoins evolve primarily as regulated payment tools or remain hybrid instruments bridging savings and settlement.