- Coinbase and PayPal offer platform-based stablecoin rewards.
- They leverage partnerships to bypass interest ban.
- User acquisition increases under decreased regulatory scrutiny.
Coinbase and PayPal circumvent the GENIUS Act’s stablecoin interest ban by offering reward APYs through platform revenue-sharing agreements with partners Circle and Paxos in the U.S.
This approach highlights strategic legal navigation to maintain competitive offerings, potentially influencing similar platform strategies across the cryptocurrency market.
Coinbase and PayPal continue offering APYs on USDC and PYUSD by structuring them as platform revenue-sharing, despite the expected 2025 ban by the GENIUS Act. This approach sidesteps restrictions imposed on stablecoin interest payments per reports.
Executive teams from Coinbase and PayPal assert they are not stablecoin issuers, claiming rewards are from revenue-sharing with Circle and Paxos. This allows them to navigate the GENIUS Act’s limitations legally. According to Brian Armstrong, CEO of Coinbase, “The reason is to differentiate the platform.“
The offering of 4.1% and 3.7% APYs has led to a boost in user acquisition. Regulatory tolerance has provided comfort amidst potential risks, as indicated by the April 2025 SEC decision on reduced scrutiny.
The availability of these rewards signifies a focus on user growth and market competitiveness. The regulatory workaround has allowed companies to continue offering incentives without classifying them as interest, thus avoiding the need for registration.
This strategy may enable further platforms to replicate this model, using third-party issuers to offer DeFi-like returns while remaining compliant. A shift in regulatory perspective could also see an increase in centralized exchanges offering similar incentives.
