Paradigm Government Affairs Vice President: Limiting Stablecoin Rewards to Transaction-Triggered Mechanisms Is Economically Unfeasible

Odaily reported that Alexander Grieve, Vice President of Government Affairs at Paradigm, published a statement pointing out that some banking lobbying groups are pushing to tighten the existing arrangements for stablecoin reward mechanisms under the GENIUS Act within crypto market structure legislation, attempting to limit stablecoin rewards solely to "merchant-facing transaction activities." This approach, he argues, is not economically sound.

Grieve stated that comparing stablecoins to credit card products represents a misalignment in regulatory thinking. Stablecoins are essentially "debit-like" instruments; their core source of revenue is not transaction fees but rather the ongoing yield generated from reserve assets (such as U.S. Treasuries) during the holding period. Their value is linked to the size of the assets, not the frequency of transactions. If rewards are only permitted to be distributed to users in consumption scenarios, it would be equivalent to imposing an "implicit holding tax" on stablecoin ownership, allowing intermediaries to retain the profits.

He pointed out that this move would not only be detrimental to individual and corporate users but could also weaken the international competitiveness of the U.S. stablecoin ecosystem, potentially driving capital and business overseas. Grieve emphasized that the economic mechanism for stablecoins should be designed around the characteristic of "holding generates value"; otherwise, it would undermine the original legislative intent of the GENIUS Act, which was to foster innovation.