Coinbase's Warning on GENIUS Act Implementation
Coinbase Global has issued a warning to the U.S. Treasury Department, urging it to maintain a strict interpretation of the GENIUS Act during the drafting of its regulatory framework. The cryptocurrency exchange emphasized that any attempt to extend the law's scope beyond Congress's original intent could negatively impact innovation and hinder the growth of the U.S. digital asset industry.
According to Faryar Shirzad, the implementing regulations must accurately reflect the clear intent of the bill and serve to strengthen the role of U.S.-issued stablecoins in global finance. He explained that regulators should ensure these assets possess the necessary flexibility and competitiveness to become a leading payment and settlement tool worldwide.
Furthermore, Coinbase argued that the Treasury must exclude entities such as blockchain validators, open-source protocols, and non-financial software providers from the GENIUS Act's purview. The company noted that the law's prohibition on interest payments is intended to apply solely to stablecoin issuers. Extending that restriction to intermediaries or exchanges that offer loyalty programs, it stated, would contradict both the wording and the purpose of the law.
Coinbase Advocates for Practical Tax and Accounting Rules
Coinbase also urged the Treasury and the Internal Revenue Service to treat payment stablecoins as cash equivalents for both tax and accounting purposes. The exchange explained that because these assets are designed to replicate the stability of traditional currencies, their tax treatment should align with that of fiat money. It also encouraged regulators to adopt a practical, low-burden approach to managing tax-related matters concerning stablecoins.
The company believes that the establishment of reasonable and predictable tax guidelines would foster the broader adoption of compliant digital assets. Such clarity, it added, could help position the United States as a global leader in the digital finance sector.
Balancing Implementation to Ensure Innovation
Additionally, Coinbase reiterated its position that a clear and balanced implementation of the GENIUS Act would cultivate a more stable environment for developers and investors. The exchange warned that overly restrictive rules could potentially undermine the very innovation the law aims to promote.
The GENIUS Act, which was enacted earlier this year, establishes a federal framework for the regulation of stablecoins. It mandates full dollar or liquid asset backing, requires annual audits for specific issuers, and sets detailed standards for foreign-issued stablecoins. Coinbase's recommendations are a reflection of its ongoing efforts to shape policy in a manner that supports growth while ensuring regulatory clarity across the cryptocurrency ecosystem.