The crypto exchange warns regulators against overreach, emphasizing that non-financial software and open-source protocols should remain outside the scope of the new stablecoin law.
Coinbase Calls for Clarity on GENIUS Act Implementation
Coinbase Global has called on the U.S. Treasury Department to ensure that upcoming rules for the GENIUS Act remain faithful to congressional intent, cautioning that excessive regulation could hinder innovation and the growth of the U.S. crypto industry.
In a formal submission to the Treasury, Coinbase stressed that regulators should avoid expanding the law’s scope beyond what Congress authorized, particularly when it comes to software developers and blockchain infrastructure providers.
“The implementing regulations must stick to the clear intent of the bill text and must ensure that U.S.-issued stablecoins have the versatility and competitiveness needed to become the world’s dominant payment and settlement instrument,” said Faryar Shirzad, Coinbase’s Chief Policy Officer.
We submitted @coinbase's response to @USTreasury's request for comments on the implementation of the GENIUS Act. Our message is simple: GENIUS is landmark legislation designed to make the US the undisputed global leader in crypto and stablecoins. To make that happen, the… pic.twitter.com/XLyq15u0Ov
Coinbase urged the Treasury to exclude non-financial software, blockchain validators, and open-source protocols from compliance obligations under the Act. The company emphasized that the interest-payment prohibition within the law applies only to stablecoin issuers, not to exchanges or intermediaries offering rewards or loyalty programs.
“Treating third-party rewards or loyalty programs as prohibited ‘interest’ would rewrite Congress’s carefully drawn lines and conflict with the statute’s text and purpose,” Coinbase stated.
The company also recommended that payment stablecoins be classified as cash equivalents for both tax and accounting purposes, given their close resemblance to fiat currency in design and functionality.
GENIUS Act Establishes Federal Stablecoin Framework
The GENIUS Act, signed into law in July 2025, created the first comprehensive federal framework for stablecoins in the United States. It requires that stablecoins be fully backed by U.S. dollars or similarly liquid assets, mandates annual audits for certain issuers, and sets standards for foreign-issued tokens.
Coinbase’s feedback underscores growing industry concern that misaligned regulations could stifle innovation and weaken the U.S.’s ambition to become the “crypto capital of the world.” The exchange urged Treasury and the Internal Revenue Service to take a “pragmatic, low-burden approach” that supports innovation while maintaining compliance and transparency.
“Payment stablecoins are a financial technology that replicate the stability and utility of fiat currency,” Coinbase wrote. “Their tax treatment should reflect this reality.”
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.
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