Coinbase urges Treasury to narrow GENIUS Act rules
Coinbase Global Inc. (NASDAQ: COIN) on Wednesday, Nov. 5, 2025, urged the U.S. Treasury Department to keep upcoming GENIUS Act rules narrow, exclude non‑financial software, blockchain validators and open‑source protocols, and limit the law's interest ban to stablecoin issuers.
The company argued that imposing obligations beyond the statute would conflict with congressional intent. In a detailed comment letter to Treasury, the exchange asked regulators to interpret the law strictly and avoid extending compliance duties to technology providers that do not hold or move customer funds.
On interest payments, Coinbase maintained that the prohibition in the statute applies only to stablecoin issuers. It argued that intermediaries and exchanges that offer third-party rewards or loyalty programs should not be captured. "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," the company wrote.
Coinbase also urged the U.S. Treasury Department and the Internal Revenue Service (IRS) to treat payment stablecoins as cash equivalents for tax and accounting purposes, citing their design to track the value of fiat currency. "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," the company noted, calling for a low-burden approach to tax reporting.
Chief Policy Officer Faryar Shirzad pressed for rules aligned with the statute's text. "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," he wrote on X. Coinbase warned that overreach could stifle innovation and undermine the law's goal of making the U.S. the "crypto capital of the world."
The GENIUS Act, signed into law in July 2025, established a federal framework for payment stablecoins; the Treasury is now drafting implementing regulations. It requires full backing by U.S. dollars or similarly liquid assets, mandates annual audits for certain issuers, and includes rules for foreign issuance. Treasury is drafting implementing regulations.
As GNcrypto covered previously, on Oct. 22, 2025, Coinbase said it would enable private stablecoin transfers on Base, its Ethereum Layer 2 network, using technology from Iron Fish, which it acquired in March 2025. The system relies on zero-knowledge proofs and view keys so users can share data with authorities when required. A privacy version of wrapped USDC on Base is supported via ChainPort. Coinbase did not provide details on any KYC requirement or how disclosures would work.
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