TLDRs:
- Coinbase shares jump 4% after-hours following Senate draft bill on stablecoin rewards.
- Senate proposal restricts interest-style payouts on stablecoins but allows activity-based rewards.
- Bitcoin surge and high-beta proxies lift crypto market sentiment alongside Coinbase gains.
- Investors monitor Fed and Senate decisions as regulatory clarity remains a key market driver.
Coinbase Global Inc. (COIN) experienced a 4% increase in after-hours trading on Tuesday, fueled by momentum in Bitcoin and the release of a new Senate draft bill aimed at clarifying U.S. crypto regulations.
The bill seeks to provide a long-awaited framework for digital assets, an issue that has lingered in Washington for several years.
Investors reacted positively to the news, viewing the legislation as a potential stabilizing force for the broader crypto market. Coinbase, as one of the largest U.S. cryptocurrency exchanges, often moves in tandem with Bitcoin prices and sentiment around regulatory developments.
Senate Bill Proposes Stablecoin Restrictions
The draft legislation, unveiled late Monday, would grant the Commodity Futures Trading Commission (CFTC) authority over spot, or cash, cryptocurrency markets. One of its key provisions would restrict interest-style payouts on stablecoins, though rewards tied to user activities, such as payments, loyalty programs, or transaction-based incentives, would remain permitted.
Coinbase has publicly emphasized the importance of maintaining stablecoin rewards. Faryar Shirzad, the company’s chief policy officer, described these incentives as critical for upholding the U.S. dollar’s “supremacy” in digital markets. Sources indicate Coinbase may reconsider support for the market-structure bill if the rules go beyond basic disclosure requirements.
Crypto Market Gains Amid Regulatory Hopes
Alongside Coinbase’s post-market gains, Bitcoin climbed approximately 4.6% to around $95,300, while high-beta crypto proxies rose 6.7%. Other exchanges and stablecoin issuers also saw modest gains: Robinhood shares rose 2.3%, and Circle increased 0.7%.
Analysts noted that the broader environment has contributed to positive investor sentiment. U.S. consumer prices rose 0.3% in December, with core inflation up 0.2%, easing concerns about aggressive Federal Reserve rate hikes. Markets now widely anticipate the Fed will hold interest rates steady at its Jan. 27-28 meeting, providing further support to risk assets, including crypto.
Investors Navigate Uncertain Regulatory Terrain
Despite the optimism, Coinbase investors face mixed prospects. The legislation could bring much-needed clarity about which tokens qualify as securities, commodities, or other categories, potentially reducing legal uncertainty around listings and market structure. However, tighter restrictions on stablecoin rewards might cut into a revenue stream that typically outperforms trading fees during low-activity periods.
Banks have voiced concerns that stablecoin rewards could siphon deposits from the traditional financial system, signaling potential pushback during Senate deliberations. Thursday’s Senate Banking Committee markup is expected to ignite debate over these provisions, with lawmakers weighing the balance between consumer protections, market innovation, and financial stability.
For now, Coinbase stock remains closely tied to Bitcoin’s performance and the evolving regulatory landscape, functioning as both a market proxy and a barometer of investor sentiment toward Washington’s approach to digital assets.
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