5-8-2025 – Coinbase and PayPal are maintaining their stablecoin reward programs offering 3%-5% annual returns despite the recently signed GENIUS Act’s restrictions on stablecoin issuers, defending their compliance by framing payouts as non-interest incentives rather than traditional yields.
The companies have continued operating their reward programs since the GENIUS Act became law on July 18, 2025, exploiting what industry observers view as regulatory arbitrage. Coinbase CEO Brian Armstrong clarified during an earnings call that the exchange structures its USDC rewards as “non-interest incentive programs,” while PayPal justifies its PYUSD returns through third-party partnerships. Since neither company issues stablecoins directly, they argue their secondary market activities fall outside the Act’s regulatory scope.
The GENIUS Act specifically targets stablecoin issuers with restrictions but does not explicitly prohibit reward programs offered by exchanges and payment platforms. This regulatory gap has allowed both firms to maintain competitive yields that significantly exceed traditional bank savings rates, potentially attracting retail investors seeking higher returns on dollar-denominated digital assets.
Legal experts suggest these programs remain compliant under current interpretations, though the regulatory landscape could shift as authorities clarify enforcement priorities. The approach highlights ongoing ambiguities in U.S. crypto regulation that could influence future legislative adjustments.
