Coinbase Global has called on the US Treasury Department to ensure its upcoming rules for the GENIUS Act remain faithful to Congress’s original intent.
Key Takeaways:
Coinbase urged the US Treasury to keep GENIUS Act rules aligned with congressional intent to avoid stifling crypto innovation. The exchange called for a narrow interpretation, excluding developers, validators, and open-source protocols from regulation. It proposed recognizing payment stablecoins as cash equivalents to simplify tax and accounting treatment.The exchange warned that excessive regulation could stifle innovation and undermine US leadership in crypto.
In a detailed response to the Treasury, the exchange urged regulators to avoid expanding the law’s scope beyond what the statute requires.
Coinbase Calls for Narrow GENIUS Act Rules to Protect Stablecoin Competitiveness
Coinbase’s Chief Policy Officer, Faryar Shirzad, said on X that the implementing regulations “must stick to the clear intent of the bill text and ensure that US-issued stablecoins have the versatility and competitiveness needed to become the world’s dominant payment and settlement instrument.”
The company pressed for a narrow interpretation of the law, excluding non-financial software developers, blockchain validators, and open-source protocols from oversight.
It also clarified that the GENIUS Act’s interest-payment prohibition applies only to stablecoin issuers, not to exchanges or intermediaries that offer loyalty or rewards programs.
“Treating third‐party rewards or loyalty programs as prohibited ‘interest’ would rewrite Congress’s carefully drawn lines and conflict with the statute’s purpose,” Coinbase said.
The exchange also proposed that payment stablecoins be recognized as cash equivalents for tax and accounting purposes, arguing that their design mirrors the stability and functionality of fiat currency.
Coinbase called on the Treasury and the Internal Revenue Service to adopt a “pragmatic, low-burden approach” to taxation for payment stablecoins.
The GENIUS Act, enacted in July 2025, set out the first federal framework for regulating stablecoins.
It requires tokens to be fully backed by US dollars or equivalent liquid assets, mandates annual audits for large issuers, and establishes standards for foreign issuance.
Coinbase’s comments highlight growing industry concern that the law’s rollout could define how the US balances innovation, investor protection, and global competitiveness in the stablecoin sector.
Coinbase Says Stablecoins Strengthen US Banking System
Last month, Coinbase rejected claims that the growth of stablecoins could drain deposits from US banks, arguing instead that they reinforce the dollar’s global dominance.
Shirzad said most stablecoin demand comes from international users seeking dollar exposure, not from U.S. savers.
The firm added that about two-thirds of stablecoin activity occurs on DeFi platforms, separate from traditional banking, and compared the current fears to those raised during past financial innovations like money market funds.
Meanwhile, the Bank of England (BOE) is also preparing to release its long-awaited regulatory framework for stablecoins, aiming to match the pace of US developments in digital asset oversight.
Deputy Governor Sarah Breeden dismissed suggestions that the UK is trailing behind the US, telling Bloomberg that the new regime would become operational “just as quickly as the US.”
The BOE will publish its formal consultation on stablecoin regulation on November 10.
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