GENIUS Act Clash: Why Coinbase Says Treasury Could Risk U.S. Crypto Goals

TLDR

• Coinbase urged the U.S. Treasury to align the GENIUS Act rules strictly with congressional intent.
• The company warned that regulatory overreach could hinder innovation and slow crypto development in the United States.
• Coinbase asked Treasury to exclude non-financial software, blockchain validators, and open-source protocols from regulation.
• The exchange stated that the law’s interest-payment prohibition applies only to stablecoin issuers, not to intermediaries or exchanges.
• Coinbase recommended that payment stablecoins be treated as cash equivalents for both tax and accounting purposes.

Coinbase has urged the U.S. Treasury Department to ensure the GENIUS Act rules stay consistent with congressional intent. The company said new regulations must support innovation and preserve America’s goal of becoming the global crypto hub.

Coinbase Calls for Regulatory Precision

Coinbase told the Treasury that GENIUS Act rules must reflect the statute’s exact language and avoid unnecessary expansion. The exchange said broader interpretations could stifle development and disrupt crypto innovation. It emphasized that Treasury should “stick to the clear intent of the bill text” for effective regulation.

Faryar Shirzad, Coinbase’s Chief Policy Officer, said in a post on X that rules should keep U.S. stablecoins competitive. He urged regulators to avoid adding restrictions not stated in the law. Coinbase said overreach could harm the country’s digital finance goals.

The company added that clear and limited guidance would foster regulatory certainty. It stated that innovation depends on predictable rules. Coinbase said this approach aligns with the GENIUS Act’s purpose of promoting stablecoin trust and market growth.

Coinbase argued the law should exclude non-financial software, blockchain validators, and open-source protocols. It said such actors do not issue stablecoins and therefore fall outside the law’s scope. The company urged Treasury to apply a narrow definition when enforcing compliance.

Coinbase also addressed the Act’s interest-payment prohibition. It said the rule applies only to stablecoin issuers, not intermediaries or exchanges. The company warned that extending the ban could distort congressional intent.

It said loyalty benefits differ from financial interest. Coinbase urged Treasury to respect the statute’s design and maintain fairness in application.

Tax and Accounting Treatment of Stablecoins

Coinbase proposed that payment stablecoins be treated as cash equivalents for tax and accounting purposes. It said stablecoins mirror fiat currency in function and stability. Therefore, they should have the same financial classification.

The company said this would simplify compliance and encourage broader adoption. Coinbase recommended a “pragmatic, low-burden approach” for tax reporting. It asked both Treasury and the IRS to ensure consistent treatment of stablecoins under federal law.

Coinbase emphasized that clarity in taxation would help companies integrate stablecoins into payments. It said confusion around accounting could slow growth. The company urged regulators to adopt policies that reflect how stablecoins operate in practice.

The GENIUS Act, enacted in July 2025, created a federal framework for stablecoin oversight. It requires full dollar backing, yearly audits, and transparency for issuers. Coinbase said aligning rules with congressional text would uphold those principles while promoting innovation.

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