Coinbase has urged the U.S. Treasury Department to take a narrow and precise approach when drafting regulations under the GENIUS Act, cautioning against interpretations that could extend beyond Congress’s original intent.
In a letter submitted this week, the crypto exchange called for clear limits on Treasury’s regulatory reach, particularly emphasizing that non-financial software developers, blockchain validators, and open-source protocols should be explicitly excluded from oversight under the new stablecoin law.
Coinbase Calls for a Narrow Interpretation
Coinbase argued that the GENIUS Act, passed in July 2025 as the first comprehensive U.S. framework for payment stablecoins, was designed to regulate issuers, not the broader crypto ecosystem.
According to the company, expanding its scope could “unintentionally stifle innovation” and deter U.S.-based developers and validators from participating in blockchain projects.
“The Treasury should follow congressional intent, not expand it,” the company stated, emphasizing the need for a balanced framework that protects consumers without undermining open-source development or non-financial software providers.
Clarifying the Stablecoin Interest Ban
Coinbase also addressed one of the Act’s most debated sections, the ban on interest-bearing stablecoins.
It clarified that the prohibition applies only to stablecoin issuers, not to exchanges or third parties that offer rewards or yield programs tied to user balances.
This interpretation, if adopted, would allow exchanges like Coinbase to continue offering reward programs for stablecoin holdings, even while issuers themselves remain barred from paying interest directly.
Industry Divide and Broader Context
Coinbase’s position contrasts sharply with feedback from traditional banking groups, which have urged Treasury to adopt a strict interpretation to close what they call “potential regulatory loopholes.”
As Treasury prepares to issue its proposed rulemaking, Coinbase’s stance underscores the growing tension between crypto platforms and legacy financial institutions over how far stablecoin regulation should go, and who it should cover.
