Coinbase Pushes Narrow Stablecoin Rules to Guard Innovation, Global Edge

Coinbase Global Inc. has urged the U.S. Treasury to implement the GENIUS Act with a narrow focus on stablecoin issuers and financial intermediaries, arguing that excessive regulatory reach could stifle innovation and undermine U.S. competitiveness in digital assets. In a detailed letter to the Treasury's Office of General Counsel, the crypto exchange emphasized that the law should not extend to non-financial software developers, open-source protocols, or blockchain validators, according to a Coinbase letter. The company's Chief Policy Officer, Faryar Shirzad, stated that the implementing regulations must align with the "clear intent of the bill text" to ensure U.S.-issued stablecoins remain versatile and globally competitive, Shirzad wrote.

The GENIUS Act, enacted in July 2025, mandates that stablecoin issuers maintain 100% reserves in U.S. dollars or equivalent liquid assets, undergo annual audits, and prioritize stablecoin holders in bankruptcy proceedings, according to a Coinotag report. Coinbase has called for the Treasury to treat payment stablecoins as cash equivalents for tax and accounting purposes, noting their functional similarity to fiat currency. The company warned that classifying stablecoins as debt instruments could complicate compliance and discourage adoption, particularly for everyday transactions. This stance aligns with Circle Internet Financial Ltd., another major stablecoin issuer, which also urged the Treasury to apply "same activity, same rules" to all dollar-like tokens to prevent regulatory arbitrage, a Yahoo report said.

Coinbase further clarified that the GENIUS Act's prohibition on interest payments should apply only to stablecoin issuers, not to customer rewards or loyalty programs offered by exchanges or intermediaries, Coinbase said in a Live Bitcoin News piece. Additionally, Coinbase requested the Treasury to avoid overbroad definitions that might subject unrelated digital assets to the same regulatory framework, stressing that non-financial blockchain infrastructure should remain outside the law's scope.

The push for targeted regulations comes as global regulators race to establish stablecoin frameworks. The Bank of England plans to release its stablecoin consultation on November 10, aiming to synchronize with U.S. rules under the GENIUS Act, a Cryptopolitan report says. Deputy Governor Sarah Breeden dismissed concerns of U.S. dominance, stating the UK's framework will become operational "just as quickly" as its American counterpart, according to a TradingView report. Meanwhile, the UK's Financial Conduct Authority has relaxed its retail crypto restrictions, signaling a broader openness to digital assets, the report added.

Industry experts project that a coherent regulatory environment could drive stablecoin transaction volumes to $10 trillion annually by 2028. However, Coinbase cautioned that fragmented or overly complex rules could deter innovation, particularly as U.S. stablecoins compete with foreign alternatives. The company also highlighted the importance of international coordination, urging the Treasury to collaborate with other regulators to avoid conflicting standards, Coinbase said.

As the Treasury finalizes its implementation of the GENIUS Act, stakeholders are closely monitoring whether it will adopt Coinbase's recommendations to prioritize innovation while ensuring consumer protection. The outcome could shape the future of digital payments, with U.S. stablecoins potentially capturing a significant share of global cross-border transactions.