Coinbase Urges US Treasury to Maintain Focus in GENIUS Act Rulemaking

Coinbase Global has reached out to the US Treasury Department, urging them to ensure that upcoming regulations for the GENIUS Act align with the original intentions laid out by Congress.

Key Takeaways:

Coinbase has called on the US Treasury to align GENIUS Act regulations with congressional intent, aiming to prevent any hindrance to crypto innovation.
The exchange advocates for a narrow interpretation of the law, suggesting that developers, validators, and open-source protocols should be excluded from regulatory oversight.
It has proposed that payment stablecoins be classified as cash equivalents to simplify their tax and accounting treatment.

The exchange has warned that excessive regulation may threaten innovation and undermine the US’s position as a leader in crypto.

In a comprehensive response to the Treasury, Coinbase advocated for regulators to keep the law’s reach limited to what is explicitly required.

Coinbase Urges US Treasury to Avoid Overreach in GENIUS Act Rulemaking

Coinbase Advocates for Specific GENIUS Act Guidelines to Bolster Stablecoin Competitiveness

Coinbase’s Chief Policy Officer, Faryar Shirzad, expressed on X that the regulations must adhere to the clear intent of the legislation. He emphasized the need for US-issued stablecoins to retain the flexibility and competitiveness required to become the world’s preferred payment and settlement instrument.

The company is pressing for a narrow interpretation of the law, asking for a focus that excludes non-financial software developers, blockchain validators, and open-source protocols from regulation.

Additionally, Coinbase clarified that the prohibition on interest payments under the GENIUS Act specifically applies to stablecoin issuers, excluding exchanges and intermediaries that provide loyalty or rewards programs.

“Classifying third-party rewards or loyalty programs as prohibited ‘interest’ would undermine the legislative boundaries drawn by Congress and contradict the law’s intended purpose,” Coinbase stated.

Furthermore, they have suggested that payment stablecoins be recognized as cash equivalents for tax and accounting purposes, asserting that these instruments are designed to be as stable and functional as traditional fiat currency.

Coinbase has urged the Treasury and the Internal Revenue Service to take on a "pragmatic and low-burden approach" to taxation regarding payment stablecoins.

The GENIUS Act, which was enacted in July 2025, established the first federal framework for regulating stablecoins. It mandates that tokens be fully backed by US dollars or equivalent liquid assets, requires annual audits for significant issuers, and sets standards for foreign issuance.

Coinbase’s statements reflect increasing industry concern that the implementation of the law could determine how the US manages the balance between innovation, investor protection, and global competitiveness within the stablecoin sphere.

Coinbase Asserts Stablecoins Enhance the US Banking System

Last month, Coinbase countered the claim that the rise of stablecoins could siphon deposits from US banks, arguing instead that they serve to strengthen the US dollar's global standing.

Shirzad remarked that most of the demand for stablecoins originates from international users looking for dollar exposure, rather than from US savers.

Coinbase also pointed out that approximately two-thirds of stablecoin transactions take place on decentralized finance (DeFi) platforms, distinct from traditional banking systems. They compared current concerns to those witnessed during earlier financial innovations, such as money market funds.

Meanwhile, the Bank of England (BOE) is preparing to unveil its much-anticipated regulatory framework for stablecoins, striving to keep pace with US advancements in digital asset oversight.

Deputy Governor Sarah Breeden dismissed claims that the UK is lagging behind the US, telling Bloomberg that the new framework would become operational “as swiftly as the US.”

The BOE plans to publish its official consultation on stablecoin regulation on November 10.