Coinbase and PayPal continue to offer USDC and PYUSD rewards despite the GENIUS Act’s interest ban, citing non-issuer status and revenue-sharing as legal cover.
On July 18, 2025, the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act became law, setting stricter oversight for the stablecoin industry.
Notably, one of its main clauses bans issuers from offering holders any form of interest or yield. According to legislators, this is intended to ensure stablecoins aren’t treated as bank deposits, which benefit from federal safeguards.
However, the law applies specifically to issuers, not to trading platforms or secondary market participants. This distinction has allowed some companies to design alternative reward structures that replicate yields without meeting the legal definition of interest.
How Coinbase and PayPal Are Responding
Leveraging this gap, Coinbase and PayPal have continued their reward programs. Coinbase currently offers U.S. customers about 4.1% annual rewards on USD Coin (USDC) holdings. Meanwhile, PayPal offers 3.7% per year on its PYUSD stablecoin through PayPal and Venmo.
Both firms emphasize that they are not the official issuers of these stablecoins. For context, Circle issues USDC, while Paxos issues PYUSD. The platforms state that their rewards derive from revenue-sharing arrangements related to broader platform operations, rather than from interest earned on user deposits.
Legal Justifications and Competitive Strategies
This legal reasoning forms the backbone of both companies’ public defense. On its latest earnings call, Coinbase CEO Brian Armstrong reaffirmed that rewards will continue, framing them as a competitive advantage that attracts and retains customers.
He emphasized that non-issuer status ensures Coinbase remains in compliance with the GENIUS Act. Armstrong also noted that customers value these benefits when deciding where to store their stablecoins.
PayPal CEO James Alexander Chriss delivered a similar message during his company’s earnings call. He described PYUSD rewards as central to customer growth and retention.
Although PYUSD is branded with PayPal’s name, Chriss clarified that it is technically a Paxos-issued product, meaning PayPal can legally maintain the rewards structure under current law.
Regulatory Context
In a press statement, a Senate staffer familiar with the legislation said that the GENIUS Act was intentionally narrow. Lawmakers wanted to address issuer-led interest programs without overreaching into secondary market activities. The official added that expanding the ban would require additional legislation.
The regulatory spotlight on stablecoins has been intense in recent years. Earlier this year, the SEC ended a 15-month investigation into PYUSD without enforcement action, signaling only a brief reprieve for PayPal.
The Road Ahead
Given the current legal framework, Coinbase and PayPal can continue their reward programs without violating the GENIUS Act. Unless Congress amends the law to include non-issuers, the opportunity for such programs to persist remains open.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
