Coinbase and PayPal are continuing to offer annual returns of 3%-5% on stablecoins, even after the new GENIUS Act was signed into law on July 18, 2025. The companies are defending their programs by categorizing the payouts as non-interest incentives, a strategy that appears to exploit a loophole in the new legislation.
The GENIUS Act places restrictions specifically on stablecoin issuers, but not on exchanges or payment platforms that offer rewards on stablecoins they don’t issue. This regulatory gap has allowed Coinbase and PayPal to maintain high-yield programs that are more attractive than traditional bank savings accounts. Coinbase CEO Brian Armstrong has publicly stated that its USDC rewards are structured as “non-interest incentive programs,” while PayPal uses third-party partnerships to justify its returns on PYUSD.
According to legal experts, these programs are currently compliant, though future regulatory clarification could change things. The situation highlights the ongoing legal ambiguities in U.S. crypto regulation and how companies are adapting to a rapidly evolving landscape.
August 2025, Cryptoniteuae
