Crypto Giants Find Loopholes in GENIUS Act to Offer ‘Rewards’ 😱

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In a move that would make a magician blush, companies like Coinbase and PayPal are pulling off a sleight of hand with the GENIUS Act, offering “rewards” to depositors despite the act’s explicit prohibition on interest or yield for stablecoin holders.

How the Crypto Magicians Are Outsmarting the Law 🎩✨

It’s a tale as old as time-or at least as old as the internet: crypto companies find a way to do what they want, regardless of what the law says. In this case, we’re talking about the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which, much to everyone’s surprise, actually tried to put a stop to stablecoin issuers giving out interest or yield. But alas, where there’s a will, there’s a loophole.

PayPal and Coinbase, two of the biggest names in the crypto world, have managed to turn the GENIUS Act on its head. Even though the act clearly states that stablecoin issuers can’t offer yield, these companies are finding ways to offer “rewards” to their customers. It’s like telling a kid they can’t have ice cream, but then handing them a popsicle and calling it a “refreshment.”

According to Jevgenijs Kazanins, during its Q2 2025 earnings call, PayPal proudly announced:

This quarter, we added the ability to earn rewards for our stablecoin on PayPal and Venmo and announced the expanded availability of PYUSD on Stellar and Arbitrum blockchains.

Technically, the issuer for PYUSD is Paxos, which means PayPal isn’t breaking any laws by offering “rewards” to its customers. It’s like hiring a friend to give you a speeding ticket so you don’t get in trouble yourself. Genius, right?

Not to be outdone, Coinbase is also in on the game, offering a program that lets USDC holders earn a whopping 4.1% in rewards just by holding onto their tokens in their Coinbase accounts. Brian Armstrong, Coinbase’s CEO, has defended this move, pointing out that Coinbase isn’t the issuer of USDC and that they’re not paying yield, but rather offering “rewards” to their “very competitive” customers. Because, you know, 4.1% isn’t really a reward; it’s just a little thank-you note for being such a loyal customer. 😅

This clever maneuver means that any company can offer yield for in-house designed stablecoins, as long as they use a third-party institution as the issuer. It’s a bit like setting up a shell company to avoid taxes-technically legal, but morally questionable.

Alex Johnson, a fintech writer, wasn’t impressed. He pointed out:

Imagine if the Durbin Amendment had prohibited banks under $10B from offering interest on deposit accounts, but they got around it by entering into BaaS (Bank as a Service) arrangements with fintech companies that offered interest to customers instead. That’s basically what’s happening here.

So there you have it: the crypto world finds a way to reward its users while the lawmakers scratch their heads, wondering where they went wrong. Maybe they should have consulted a magician before drafting the GENIUS Act. 🎭🔍

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2025-08-05 01:58