Regulatory Arbitrage Through Continuity: Pre-Existing Stablecoin Reward Programs in the Post-GENIUS Act Era

The GENIUS Act of 2025 prohibited issuer-paid interest on payment stablecoins in an effort to separate digital assets from traditional banking functions. Contrary to assumptions of rapid market innovation, this study finds that major centralized exchanges maintained and slightly enhanced pre-existing reward programs, demonstrating regulatory arbitrage through continuity rather than innovation. Using a pre-post comparative design with 768 daily yield observations from Coinbase and Kraken (January 2025-January 2026), we document that yields increased significantly from 4.15% pre-enactment to 4.53% post-enactment (p = 0.0000). No significant platform differentiation or post-Act time trends were observed. These findings reveal a critical flaw in form-over-substance regulation: failure to address pre-existing market structures allows regulatory arbitrage through program continuity rather than requiring innovation. We recommend retrospective regulatory assessments and activity-based principles that target economic functions regardless of when they were established.