TL;DR
- Coinbase calls on the U.S. Treasury for a narrow interpretation of the new stablecoin law (GENIUS Act).
- The firm seeks to exclude software developers and validators from direct oversight.
- Coinbase argues that the interest prohibition should not apply to rewards programs.
Coinbase has submitted a detailed response to the U.S. Treasury regarding the implementation of the GENIUS Act, the new federal legislation for stablecoins. The exchange warned that excessive regulation could stifle innovation and undermine United States leadership in the crypto sector.
Faryar Shirzad, Coinbase’s Chief Policy Officer, stated on X that the regulations “must stick to the clear intent of the bill text” to ensure that U.S.-issued stablecoins have the “necessary versatility and competitiveness” to become the dominant global payment and settlement instrument.
The company pushed for a narrow interpretation of the law, specifically asking to exclude non-financial software developers, blockchain validators, and open-source protocols from oversight.
Furthermore, Coinbase clarified a critical point: the GENIUS Act’s prohibition on interest payments should apply only to stablecoin issuers, and not to intermediaries or exchanges that offer loyalty or rewards programs to their users.
The Tax Debate and Global Competition
In its communication, Coinbase 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.
The exchange urged the Treasury and the IRS to adopt a “pragmatic, low-burden approach” to their taxation. Coinbase’s comments underscore the growing industry concern over how the implementation of the GENIUS Act, enacted in July 2025, will define the balance between innovation, investor protection, and global competitiveness.
This stance aligns with the firm’s previous statements, which last month rejected claims that stablecoins drain deposits from U.S. banks, arguing that they reinforce the dollar’s global dominance by primarily serving international users on DeFi platforms.
Meanwhile, the regulatory race is intensifying. The Bank of England (BOE) is also preparing to publish its formal consultation on stablecoin regulation on November 10, seeking to match the pace of U.S. development in digital asset oversight.
