Coinbase urges Treasury to keep GENIUS Act rules aligned with congressional intent

Crypto exchange Coinbase Global has urged the U.S. Treasury Department to keep its forthcoming rules for the GENIUS Act tightly aligned with congressional intent.

In a detailed response to the Treasury, Coinbase noted that Treasury should avoid imposing requirements beyond what the statute explicitly commands, warning that overreach could stifle innovation and undermine the law's goal of making the U.S. the "crypto capital of the world."

"[The implementing regs 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 Coinbase Chief Policy Officer Faryar Shirzad in a Wednesday post on X.

Specifically, Coinbase called on regulators to apply a narrow reading of the law, excluding non-financial software, blockchain validators, and open-source protocols from its scope. It noted that the Act's interest-payment prohibition applies only to stablecoin issuers — not to intermediaries or exchanges that offer loyalty rewards.

"Treating third‐party rewards or loyalty programs as prohibited 'interest' would rewrite Congress's carefully-drawn lines and conflict with the statuteʼs text and purpose," said the company.

Coinbase further recommended that payment stablecoins be treated as cash equivalents for tax and accounting purposes.

"Payment stablecoins are a financial technology that by design and function replicate the stability and utility of fiat currency. Their tax treatment should reflect this reality," Coinbase said, adding that the Treasury and the Internal Revenue Service should adopt a "pragmatic, low-burden approach" to tax issues around payment stablecoins.

The GENIUS Act, signed into law in July 2025, establishes a federal framework to regulate stablecoins. It requires stablecoins to be fully backed by U.S. dollars or similarly liquid assets, mandates annual audits for certain issuers, and sets guidelines for foreign issuance.