Coinbase urges the U.S. Treasury to respect congressional intent and allow stablecoin yields for non-issuers, while major banks push for a blanket ban across the ecosystem.
Treasury Caught Between Crypto and Banking Lobbies
The U.S. Department of the Treasury is facing mounting pressure from both crypto firms and traditional banks over how to interpret and implement the GENIUS Act — the landmark stablecoin legislation passed in July 2025.
The law, designed to establish a federal framework for stablecoin payments, includes a prohibition on interest payments for payment stablecoins. But how far that restriction should extend is now the subject of fierce debate.
Coinbase: “Treasury Can’t Override Congress”
In a letter submitted Tuesday, Coinbase urged the Treasury to limit the interest ban strictly to stablecoin issuers, arguing that non-issuers such as exchanges and payment platforms should still be able to offer rewards or yields tied to stablecoin holdings.
The exchange emphasized that this position reflects Congress’s clear intent, saying:
“Treasury has no authority to second-guess Congress’s work,” Coinbase wrote. “Congress went no further — it declined to include non-issuer third parties within that prohibition because banning other types of payments on stablecoins across the board would have inhibited growth and innovation.”
An excerpt from the ANPR response by BPI-led banking associations
Coinbase also reiterated that non-financial software, validators, and open-source protocols should remain outside the GENIUS Act’s scope, and it called for payment stablecoins to be treated as cash equivalents for tax and accounting purposes.
Banks Push for a Blanket Ban
Meanwhile, the Bank Policy Institute (BPI) and several major U.S. banking groups have taken the opposite stance.
In a joint statement Wednesday, they urged the Treasury to extend the ban on interest payments to all stablecoin-related entities, including digital asset service providers and their affiliates.
“Implement the GENIUS Act’s prohibition on the payment of interest or yield on payment stablecoins — whether paid directly by an issuer or indirectly by an issuer’s affiliates or partners,” the BPI said.
The BPI has long argued that allowing interest-bearing stablecoins could divert trillions from the traditional banking system, estimating up to $6.6 trillion in potential deposit outflows.
The Stakes for the Stablecoin Market
The Treasury’s advance notice of proposed rulemaking (ANPRM), which closed Tuesday, marks the second public comment period for the GENIUS Act’s implementation.
How the agency interprets “interest” could shape the future of stablecoin innovation in the U.S., determining whether platforms like Coinbase and Circle can continue offering reward-based features tied to stablecoins.
The final rules are expected late 2026 or early 2027, depending on when regulators issue their formal implementation guidance.
The debate underscores a core tension in U.S. crypto policy — between the banking industry’s desire to protect deposits and the crypto sector’s push for innovation and open financial products.
The Treasury’s ultimate decision on stablecoin yields could define how — and where — the next generation of digital dollar payments will take shape.
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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