Coinbase Urges Treasury to Align GENIUS Act Rules with Congressional Intent
Coinbase has urged the U.S. Department of the Treasury to ensure that upcoming rules for the GENIUS Act align closely with Congress’s original intent. The company warned that adding extra requirements could hinder stablecoin innovation and reduce U.S. competitiveness in digital assets.
In a letter to the Treasury’s Office of General Counsel, Coinbase emphasized that stablecoin rules should apply narrowly to actual issuers and financial intermediaries. Non-financial software and unrelated digital assets should be excluded from regulation.
The GENIUS Act, signed into law in July 2025, sets a federal framework for stablecoins. It requires issuers to keep 1:1 reserves, undergo audits, and meet consumer protection standards.
Faryar Shirzad, Coinbase’s Chief Policy Officer, said, “The implementing regs must stick to the clear intent of the bill text.” He added that U.S.-issued stablecoins need enough flexibility to become a dominant global payment method.
Narrow Interpretation for Stablecoin Regulations
Coinbase urged regulators to interpret key terms like “payment stablecoin” and “digital asset service provider” narrowly. The focus should remain on entities that actually issue or handle stablecoins.
The company warned against subjecting non-financial developers or blockchain infrastructure providers to stablecoin regulations. It stated, “Non-financial software, blockchain infrastructure, and digital assets not marketed as GENIUS-compliant stablecoins are outside the statute’s scope.”
Coinbase also clarified that the law’s ban on paying interest should apply only to stablecoin issuers. Exchanges offering customer rewards or loyalty programs should not be considered as paying interest.
Tax Treatment and Regulatory Clarity
Coinbase advocated for payment stablecoins to be treated as cash equivalents for tax and accounting purposes. The letter noted their stable value and functionality is similar to fiat currency.
The company called for a pragmatic tax approach, highlighting that stablecoin transactions should not trigger capital gains. Treating them like volatile digital assets could overwhelm the IRS with unnecessary data.
Coinbase also urged clear explanations of penalties and better coordination among regulators. It emphasized that consistent guidance is essential for U.S. stablecoins to compete globally.
“Congress carefully drafted GENIUS with these goals in mind,” Coinbase concluded. “Implementing agencies must issue rules consistent with these objectives to benefit Americans at scale.”
