Regulatory Clarity and the Rise of U.S. Stablecoins: How Coinbase's Advocacy Shapes the Future of Crypto

The U.S. stablecoin market is at a pivotal inflection point. With the passage of the GENIUS Act in June 2025, the first federal regulatory framework for stablecoins, the sector is poised for explosive growth. However, the law's success hinges on its implementation. Coinbase, the largest U.S. crypto exchange, has emerged as a critical actor in shaping this implementation, advocating for a narrow interpretation of the Act that prioritizes innovation while maintaining compliance. This strategic approach could not only catalyze the stablecoin market's expansion but also position U.S. crypto firms to dominate a global industry projected to reach $3 trillion by 2030, as an AltcoinBuzz piece on stablecoin credit strategies describes.

The GENIUS Act: A Framework for Stability and Innovation

The GENIUS Act mandates that stablecoin issuers maintain 1:1 fiat reserves and submit to monthly audits, addressing long-standing concerns about transparency and systemic risk, as Coinbase urged. While these requirements align with global efforts like the EU's MiCA and Hong Kong's conservative regime, the U.S. approach diverges in key ways. For instance, the Act prohibits stablecoin issuers from holding longer-maturity bonds in reserves-a restriction absent in the EU-and mandates that banks issue stablecoins from a separate balance sheet to insulate core operations, according to a US–EU comparison. These nuances reflect a U.S.-centric focus on risk mitigation and federal payment system integration.

Coinbase has argued that the Act's ban on interest payments on stablecoins should apply exclusively to issuers, not intermediaries or exchanges. This distinction is critical. By preserving the ability of platforms like Coinbase to offer interest-bearing stablecoin products, the company contends that consumer incentives and innovation in decentralized finance (DeFi) can thrive without compromising regulatory compliance - an argument Coinbase made in its feedback to the Treasury. This stance aligns with the Act's original intent: to foster a stable, transparent market while avoiding stifling innovation.

Coinbase's Advocacy: A Blueprint for Market Growth

Coinbase's advocacy extends beyond legal technicalities. The company has urged the U.S. Treasury to treat fully fiat-backed stablecoins as cash equivalents, emphasizing their operational similarity to bank deposits. This classification could unlock new financial products, such as tokenized credit and lending strategies, while adhering to the Act's reserve requirements. Indeed, Coinbase's 2026 collaboration with Apollo to launch stablecoin credit strategies-featuring over-collateralized asset lending and tokenized credit holdings-demonstrates how regulatory clarity can drive innovation, as reported by AltcoinBuzz.

The market is already responding. Bank of America (BofA) projects that stablecoin supply could grow by up to $75 billion in the near term, fueled by the GENIUS Act's clarity and infrastructure advancements (BofA projects). With the market now valued at $300 billion as of October 2025, and long-term projections pointing to a $3 trillion total addressable market by 2030, the stakes for regulatory alignment are immense - a point underscored in the AltcoinBuzz piece noted above.

Global Competition: U.S. vs. EU vs. Hong Kong

While the U.S. and EU share similarities in stablecoin regulation, their approaches diverge in execution. The EU's MiCA framework emphasizes cross-border interoperability through a "license once, operate everywhere" model, whereas the U.S. prioritizes federal-level integration and passporting under the GENIUS Act, a difference explored in the WEF's US–EU comparison. Hong Kong, meanwhile, maintains a restrictive regime with single-digit licenses requiring 100% high-quality reserves and no active management, as a LinkedIn analysis comparing MiCA and Hong Kong regulations discusses (MiCA vs Hong Kong).

These differences will shape the competitive landscape. The U.S. and EU are likely to diverge further by 2030, with the EU focusing on market integration and the U.S. on federal payment system alignment. Hong Kong's risk-averse model may limit its scalability but could attract institutional investors seeking stability. For U.S. firms like Coinbase, the GENIUS Act's emphasis on compliance and innovation creates a unique value proposition: a regulatory environment that balances risk control with the flexibility to experiment - a point the WEF comparison highlights.

The Path to Long-Term Outperformance

Coinbase's advocacy for a narrow implementation of the GENIUS Act is not just about compliance-it's about positioning the U.S. as the global leader in tokenized finance. By ensuring that intermediaries and exchanges remain agile, the company is helping to create a market where stablecoins can serve as the backbone of DeFi, cross-border payments, and tokenized assets. This aligns with broader trends: as BofA notes, infrastructure developments in tokenized finance are set to accelerate, further boosting stablecoin demand (the BofA projection cited above).

Moreover, Coinbase's strategies-such as its 2026 credit initiatives-highlight how regulatory clarity can enable new business models. These strategies, built on over-collateralization and monthly audits, demonstrate that compliance and innovation are not mutually exclusive but complementary, as the AltcoinBuzz article illustrates. For investors, this signals a market where U.S. firms can outperform global peers by leveraging a regulatory framework that is both robust and adaptive.

Conclusion

The GENIUS Act has set the stage for a new era in stablecoin markets. Coinbase's advocacy for a narrow, innovation-friendly implementation underscores the importance of aligning regulatory intent with market realities. As the U.S. navigates its path between the EU's integrated model and Hong Kong's conservatism, the focus on compliance, transparency, and innovation will be key. For investors, the message is clear: the U.S. stablecoin market, guided by thoughtful regulation and proactive industry leadership, is not just growing-it's becoming the foundation of a $3 trillion crypto economy.