Coinbase Global Inc. and PayPal Holdings Inc. said they will keep paying customers annual rewards of roughly 3% to 5% on stablecoin balances, despite a new U.S. law that bars issuers from offering interest-like returns. The GENIUS Act, enacted last month, legalizes certain dollar-pegged tokens but explicitly prohibits issuers from paying yield to holders to ensure the coins are treated as payment instruments rather than investment products. Both firms argue the restriction does not apply because they are not the issuers of the coins they promote. Coinbase stopped co-issuing USD Coin in 2023; the token is now issued solely by Circle and offers Coinbase users a 4.1% rewards rate. PayPal’s PYUSD is issued by Paxos Trust Co., enabling PayPal and its Venmo unit to continue advertising a 3.7% return to account holders. On last week’s earnings calls, Coinbase Chief Executive Officer Brian Armstrong described the rewards program as “a major reason that people store their funds with Coinbase,” while PayPal CEO James Chriss called his firm’s offer a key customer draw. Critics say the approach exploits a loophole and could undermine the law’s intent, potentially prompting regulators or Congress to revisit the language governing secondary-market incentives.