Crypto’s Trump-Era Honeymoon Cracks as Stablecoin Fight Stalls Key U.S. Bill

The euphoria that swept through the crypto industry during Donald Trump’s return to the White House is beginning to fade. What many executives hoped would be a fast-moving push toward regulatory clarity has instead run into a familiar Washington roadblock—this time over how stablecoins should be treated under U.S. law.

On Wednesday, the Senate Banking Committee abruptly delayed discussion of a long-anticipated digital asset bill after intense internal debate and a sudden withdrawal of support from Coinbase. The move sent a chill through the industry, which had viewed the legislation as a crucial step toward modernizing America’s crypto rulebook.

At the heart of the dispute is stablecoin yield—specifically, whether companies should be allowed to offer rewards or returns to users who hold dollar-pegged tokens.

Stablecoins are a foundational pillar of the crypto ecosystem, acting as a bridge between traditional finance and digital assets. Their use has surged since the U.S. passed landmark legislation governing them in July, and many firms see them as essential to payments, trading, and on-chain finance.

The latest version of the Senate bill, however, proposes banning yield on stablecoins, while potentially allowing limited forms of rewards. The problem, according to industry insiders, is that the language around what is allowed remains vague.

“This delay is concerning as it creates a probability for the U.S. to be one of the only major digital asset hubs without a clear capital markets rulebook in 2026,” said Dea Markova, director of policy at Fireblocks.

Nana Murugesan, a former senior executive at Coinbase, warned that the bill’s ambiguity could leave firms guessing about compliance. “Whenever things are unclear, it is then again subject to interpretation,” he said.

Coinbase’s reaction was swift and public. CEO Brian Armstrong announced on X that the company was pulling its support for the bill, citing “too many issues” in the latest draft. Among Coinbase’s main objections are limits on its ability to offer rewards on stablecoin holdings—an incentive model it argues mirrors traditional savings accounts.

Coinbase currently offers rewards to users holding USDC, the dollar-pegged stablecoin issued by Circle. Other projects, such as Ethena’s USDe, bake yield directly into the token’s design, making the proposed restrictions even more controversial.

“Stablecoin rewards sit at the intersection of payments, savings-like behavior, and market incentives,” said Ari Redford, global head of policy at TRM Labs. That overlap, he explained, is why what might seem like a technical detail has become a defining policy battle.

Crypto executives worry that restricting rewards would place U.S.-regulated firms at a disadvantage compared with offshore competitors.

“If there are any restrictions, the theory is that’s only going to disadvantage U.S. companies,” Murugesan said, noting that overseas platforms could continue offering incentives with fewer constraints.

Traditional banks, however, see the issue differently. The banking lobby has warned that yield-bearing stablecoins could drain deposits from lenders, undermining the financial system. Under last year’s Genius Act—legislation that allows banks to issue their own stablecoins—issuers are explicitly banned from offering interest.

Several crypto companies have since applied for bank charters, further blurring the line between digital asset firms and traditional financial institutions.

The episode also highlights how much influence the crypto industry now wields in Washington. Coinbase is among donors tied to a ballroom project Trump is building at the White House, and Armstrong is a vocal supporter of the president.

That clout, however, cuts both ways. Senator Cynthia Lummis pushed back sharply against Coinbase’s withdrawal of support, posting that such reactions from crypto firms “proves they just are not ready.”

The exchange underscores a growing tension: crypto companies want regulatory clarity that preserves innovation, while lawmakers and banks remain wary of allowing digital assets to function too much like traditional financial products.

After helping Trump return to office and celebrating the passage of stablecoin legislation last year, crypto leaders now fear the momentum is slipping. A prolonged stalemate could leave the U.S. lagging behind other global markets that are moving faster to define clear, comprehensive digital asset rules.

For now, the Senate delay has replaced optimism with unease. What was expected to be a victory lap for crypto’s political rise may instead become a reminder that, even with newfound influence, the industry’s toughest battles are far from over.