Why Investors May Be Overestimating the Stablecoin Fight for Circle and Coinbase

The fight over stablecoin yield is quietly becoming one of the most important battles in crypto — and it’s now playing out far beyond the industry itself.

What started as a technical question about how stablecoins should work has turned into a full-blown clash between crypto companies, banks, and regulators over who gets to control — and profit from — the next wave of digital dollars.

As that battle plays out in the negotiations around the CLARITY Act, Bitwise Asset Management's Head of Research Ryan Rasmussen tells Coinage the market may be misinterpreting the stalemate.

“The CLARITY Act is so much bigger than what issuers can or can’t do with yield, and how consumers can or can’t access that yield,” he said. “But it’s really been the sticking point because of course, banks are fighting yield being passed down to consumers because they’re worried about deposit flight, etcetera. I think ultimately, what it means is that we’re making progress and progress is good.”

For months, investors have been grappling with what the end result may mean for stablecoin adoption. But stablecoins are a lot of things to a lot of people. To some, they are a way to hold dollars in a digital wallet akin to a savings account. To others, they are only good for payments or cross-border remittances.

Since the first stablecoin bill, the GENIUS Act, passed last year, bank lobbying efforts have grown more aggressive to ensure stablecoins can't allow crypto companies the ability to offer all of those things without having to comply with as many regulations.

The implications are already showing up in markets. Shares in the USDC stablecoin issuer Circle fell 25% last week after reports suggested the latest round of negotiations would remove the ability for stablecoin holders to earn yield. Circle has an existing partnership with Coinbase, which shares revenue from USDC adoption. Last year Coinbase raked in $1.3 billion in revenue tied to the partnership, up from $911 million the year prior.

Still, Rasmussen doesn’t believe the outcome of the debate will stop stablecoins from growing. In fact, he thinks the market is overestimating how important yield is in the first place.

“I don't personally share that view,” he said, referring to concerns that limiting yield could slow stablecoin adoption. “I think there will be workarounds, whether it be loyalty programs or other types of mechanisms to pass on yield to stablecoin holders.”

Additionally, Rasmussen points out that yield doesn't really play a factor in the other stablecoin use cases — particularly payments.

“Stablecoin payments, we believe, is going to be one of the major catalysts that pushes stablecoin AUM from $300 billion to $3 trillion over the next five years," Rasmussen said.

That kind of growth wouldn’t come from retail investors chasing yield — it would come from businesses using stablecoins as infrastructure.

“The business using stablecoins to pay a manufacturer in another country isn't doing it because they're clipping some yield,” Rasmussen explained. “They're doing it because stablecoins are lower cost, higher speed, more efficient from a capital perspective and from a cost perspective.”

In other words, yield might drive the headlines for now, but utility drives adoption. Still, the outcome of the yield debate will shape who captures the value from that adoption.

If issuers retain yield, they become highly profitable financial intermediaries. If users capture it, stablecoins become even more competitive with traditional banking products.

Either way, the stakes are enormous and it explains why the CLARITY Act is proving much tougher to settle than the GENIUS Act.

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