• Coinbase asked the Treasury to exclude developers, validators, and open-source protocols from GENIUS Act regulation.

  • The company proposed treating payment stablecoins as cash equivalents for simpler tax and accounting treatment.

  • Coinbase warned that excessive oversight could hinder innovation and reduce U.S. leadership in digital assets.

Coinbase Global has called on the U.S. Treasury Department to interpret the GENIUS Act within Congress’s original boundaries. The exchange submitted a detailed response emphasizing that overly broad rules could hinder digital asset innovation and reduce U.S. competitiveness in the global market. The GENIUS Act, enacted in July 2025, established the first federal framework for regulating stablecoins, requiring full dollar backing and annual audits for major issuers.

Coinbase Seeks Clarity on Regulatory Boundaries

In its statement, Coinbase urged the Treasury to keep the GENIUS Act focused on financial entities directly involved in stablecoin issuance. The company stated that the law should not include software developers, blockchain validators, or open-source protocols under regulatory oversight. It noted that expanding the scope beyond financial activities would contradict the statute’s language and intent.

Chief Policy Officer Faryar Shirzad wrote on X that the new regulations must remain consistent with the bill’s text. He said stablecoin rules should ensure that U.S.-issued tokens maintain the flexibility and competitiveness needed to serve global payments and settlements. Coinbase clarified that the GENIUS Act’s prohibition on paying interest applies only to stablecoin issuers. It explained that exchanges and intermediaries operating loyalty or rewards programs fall outside this restriction. The company warned that classifying third-party rewards as interest would contradict the law’s framework and create confusion across the industry.

Proposal to Recognize Stablecoins as Cash Equivalents

Coinbase also recommended that stablecoin payments receive recognition as cash equivalents for tax and accounting purposes. The company argued that stablecoins mirror the stability of fiat currency and serve similar functions in transactions. It urged both the Treasury and the Internal Revenue Service to adopt a practical approach that reduces tax complexity for payment stablecoin users.

The exchange cautioned that excessive regulation could discourage innovation and affect U.S. leadership in the digital asset sector. Coinbase’s filing emphasized that stablecoin rules should balance oversight with the need to maintain financial innovation. It added that clear boundaries would prevent unnecessary burdens on developers and decentralized systems.

Stablecoin Role in Supporting the Dollar

In a separate statement last month, Coinbase disputed claims that stablecoins weaken the U.S. banking system. Shirzad stated that most stablecoin demand originates from international users seeking dollar exposure rather than from U.S. depositors. The company said that about two-thirds of stablecoin activity takes place on decentralized finance platforms, independent of traditional banks.In the United Kingdom, the Bank of England has scheduled the release of its regulatory consultation concerning stablecoins for November 10. As per Deputy Governor Sarah Breeden, the forecasted framework will move with a tempo akin to that of the U.S., thus making it possible for both regions to be in sync as far as digital asset regulation is concerned.