stable coins
By James Thorp
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The Activity-Based Rewards Loophole. Section 404 bans passive interest. It doesn't ban activity-based rewards.
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What $305 Million in Revenue Pressure Looks Like. Coinbase pulled in $305.4 million from stablecoin revenue in Q1 2026 alone.
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Banks Are Watching, and They Should Be. The total stablecoin market sits at roughly $320 billion, with USDC holding a meaningful share.
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Coinbase isn't waiting around. The exchange has quietly partnered with Ethena — a synthetic dollar protocol sitting on $5 billion in assets — to keep stablecoin yields alive for…
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The CLARITY Act, working its way through Congress, has a specific provision that's got crypto firms sweating: Section 404.
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Section 404 bans passive interest. It doesn't ban activity-based rewards. That distinction sounds like legal fine print, but it's basically the whole ballgame here.
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Ethena's model is built around synthetic dollars and active market positioning. It's not a savings account. It's closer to a managed trading strategy that happens to produce yield.
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Tom Wan of Entropy Advisors flagged the broader ambition here. Per Wan, the partnership has the potential to bypass traditional banking altogether by leaning on institutional…
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Coinbase pulled in $305.4 million from stablecoin revenue in Q1 2026 alone. That's a number worth protecting.
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The investment angle makes that clearer. Coinbase Ventures put money into Ethena as part of this deal, making it the firm's first direct investment in the protocol.
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See also: Ethereum Slides Below $2,000 as Coinbase Premium Hits 4-Month Low
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Coinbase also takes on a custodian and operational role for Ethena's $5 billion in assets. So the relationship runs deeper than a simple referral or integration.
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If Coinbase can offer compelling yields tied to Ethena's trading activity, and those yields beat what a savings account pays — which isn't hard given where average deposit rates…
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Banks probably won't panic overnight. But the Coinbase-Ethena partnership is the kind of product innovation that keeps bank treasurers up at night.
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Read also: Coinbase Backs ProShares Treasury ETF Built for Stablecoin Reserve Management
The Currency Analytics
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