Coinbase urges Treasury to implement GENIUS Act faithfully, warning excessive rules could stifle U.S. stablecoin innovation.
Coinbase Global, one of the United States’ largest cryptocurrency exchanges, has urged the Treasury Department to ensure that rules under the GENIUS Act are implemented exactly as Congress intended.
The legislation, passed to create a federal framework for U.S. dollar-backed stablecoins, is viewed as a critical step toward mainstream adoption of digital assets.
Calls for Clear, Balanced Regulation
In its public commentary, Coinbase stressed that regulations should not go beyond the law’s text, warning that overreach could stifle innovation.
The company recommended excluding non-financial software developers, blockchain validators, and open-source protocol contributors from the stablecoin regulatory scope.
It also called for clarification that prohibitions on paying interest should apply only to stablecoin issuers, not exchanges offering rewards or loyalty programs.
Put simply, the GENIUS Act sets the legal framework for how stablecoins should operate, but the Treasury Department is responsible for writing detailed rules to put the law into practice.
Coinbase is concerned that some interpretations of these rules could go beyond what Congress actually intended, potentially creating extra restrictions on developers or exchanges that the law never envisioned.
Stablecoins as Cash Equivalents
The exchange further argued that payment-focused stablecoins should be treated as cash equivalents for accounting and tax purposes, reflecting their primary role as a medium of exchange rather than an investment.
Coinbase said overly strict rules risk slowing U.S. crypto innovation, potentially allowing foreign competitors to capture market share in digital payments and decentralized finance.
Why This Matters
How Treasury implements the GENIUS Act could determine whether the United States maintains a leadership role in the rapidly growing stablecoin and digital payments market.
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