Coinbase Urges U.S. Treasury to Stick to Congressional Intent in GENIUS Act Rulemaking

Crypto exchange Coinbase has called on the U.S. Treasury Department to ensure that upcoming regulations under the GENIUS Act remain closely aligned with congressional intent, warning that excessive rulemaking could curb innovation and undermine America’s bid to become the “crypto capital of the world.”

In a detailed response to the Treasury, Faryar Shirzad, Coinbase’s Chief Policy Officer, emphasized that regulators should “stick to the clear intent of the bill text” and avoid introducing burdens beyond what the statute requires.

“The implementing regulations must ensure that U.S.-issued stablecoins have the versatility and competitiveness needed to become the world’s dominant payment and settlement instrument,” Shirzad said in a post on X Wednesday.

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Coinbase Warns Against Regulatory Overreach

Coinbase urged Treasury to apply a narrow interpretation of the GENIUS Act’s provisions, clarifying that the law should not extend to non-financial software developers, blockchain validators, or open-source protocol operators. The exchange also stressed that the Act’s interest-payment prohibition applies solely to stablecoin issuers, not to intermediaries or exchanges offering rewards or loyalty programs.

“Treating third‐party rewards or loyalty programs as prohibited ‘interest’ would rewrite Congress’s carefully drawn lines and conflict with the statute’s text and purpose,” Coinbase stated.

Tax Treatment Recommendations for Stablecoins

The company further recommended that payment stablecoins be treated as cash equivalents for both tax and accounting purposes, arguing that their design closely mirrors the functionality of fiat money.

“Payment stablecoins replicate the stability and utility of fiat currency. Their tax treatment should reflect this reality,” Coinbase wrote, urging the Treasury and the Internal Revenue Service (IRS) to adopt a “pragmatic, low-burden approach” to stablecoin taxation.

GENIUS Act: A Landmark Stablecoin Framework

Enacted in July 2025, the GENIUS Act created the first comprehensive federal framework for stablecoins in the United States. The law mandates that stablecoins be fully backed by U.S. dollars or similarly liquid assets, enforces annual audits for eligible issuers, and sets standards for foreign issuance.

Coinbase’s response underscores the tension between policymakers aiming to safeguard the financial system and industry players seeking regulatory clarity without compromising innovation.