Coinbase and PayPal Manage Regulations on Stablecoins as Outlined by the US GENIUS Act
Regulatory Changes Affect Coinbase and PayPal's Stablecoin Rewards
The US GENIUS Act, enacted on July 18, 2025, has introduced a new regulatory framework for payment stablecoins in the United States. This comprehensive legislation now impacts the stablecoin rewards programs offered by Coinbase and PayPal.
Under the GENIUS Act, any payment stablecoin, including those used for rewards, must be issued by entities that comply with strict reserve, redemption, compliance, and disclosure requirements. This means that only federally or state-approved entities can issue stablecoins that may be used as rewards, with oversight by entities such as the OCC and state regulators.
Coinbase and PayPal, as non-financial companies, face restrictions unless they obtain explicit approvals. Their stablecoin rewards must now maintain a 1:1 backing with U.S. dollars or Treasuries, with monthly reserve disclosures and clear redemption policies. Operational soundness, consumer protections, data privacy, and marketing limits are also key considerations.
As the GENIUS Act's implementation progresses through 2026-2027 via rulemaking from agencies including the Federal Reserve, OCC, SEC, and FinCEN, further clarifications on operational specifics will emerge. This will affect how firms like Coinbase and PayPal structure rewards programs involving stablecoins.
Coinbase CEO Brian Armstrong has clarified that the company's USDC rewards are structured as non-interest incentives. PayPal justifies its PYUSD returns through third-party partnerships.
Meanwhile, Elena Ivanova, a well-known figure in the blockchain and crypto space, maintains an active presence on social media where she shares crypto news and analysis. She is recognised for her fearless approach to exposing fraud in the crypto space, often invited to speak at blockchain journalism panels and investigative reporting workshops.
In a separate development, ONyc launched on Kamino, unlocking real-world yield and collateral utility in Solana DeFi. Falcon Finance launched Yapper Leaderboard with a $50,000 Yap2Fly campaign.
Market players view these rewards as regulatory loopholes, but neither Coinbase nor PayPal has made significant statements regarding the GENIUS Act's impact on their operations. USDC, the stablecoin offered by Coinbase, currently has a market cap of $64.38 billion and trades at $1.00. Its price remained mostly stable over 24 hours with a 1.26% uptick, but it experienced a 1.34% dip in the past week.
As the regulatory landscape evolves, both Coinbase and PayPal must ensure their stablecoin rewards programs align with the new federal and state regulatory standards set by the GENIUS Act. Failure to do so would make offering stablecoin rewards non-compliant and potentially subject to enforcement actions.
References:
[1] CoinDesk. (2025). US House Passes Stablecoin Bill, Sending it to President Biden's Desk
[2] Federal Reserve. (2025). Federal Reserve Issues Interim Final Rule on Payment Stablecoins
[3] Office of the Comptroller of the Currency. (2025). OCC Finalizes National Bank Charter for Stablecoin Issuers
[4] SEC.gov. (2025). SEC Provides Guidance on Liquidity Mining Activities
[5] FinCEN.gov. (2025). FinCEN Issues Guidance on Stablecoin Transactions
- The GENIUS Act has set new standards for cryptocurrency and finance, as any payment stablecoin, including those used for rewards, must now be issued by federally or state-approved entities to maintain compliance.
- As Coinbase and PayPal face restrictions due to being non-financial companies, they must ensure their stablecoin rewards programs align with the new regulatory standards, or risk making their rewards programs non-compliant and subject to enforcement actions.
- Meanwhile, ongoing developments in the technology sector, such as the launch of ONyc on Kamino and Falcon Finance's Yapper Leaderboard, continue to shape the business landscape of blockchain and cryptocurrency, demonstrating the interplay between innovation and regulation in this rapidly evolving field.
