Coinbase urges innovation and trust in U.S. Treasury interpretation of GENIUS Act

Coinbase has submitted its response to the U.S. Treasury’s advance notice of proposed rulemaking on the implementation of the GENIUS Act. The firm has urged the U.S. Treasury to enact precise, targeted regulations that support innovation, safeguard consumers, and establish the U.S. as a global leader in digital assets.

The crypto exchange stated that proper GENIUS implementation will accelerate the acceptance of stablecoins as a reliable payment method through federal monitoring of issuers, 100% reserve backing, and holder priority in bankruptcy. The GENIUS Act establishes a legislative framework for regulating stablecoins and was passed into law in July 2025. 

The GENIUS Act establishes rules for foreign issuance, requires yearly audits for certain issuers, and mandates that stablecoins be fully backed by U.S. dollars or comparable liquid assets.

Coinbase urges U.S. Treasury to protect GENIUS Act integrity

The digital asset platform explained that a clear, comprehensive, and trust-building regulatory framework will increase the use of stablecoins in mainstream trade. 

We submitted @coinbase's response to @USTreasury's request for comments on the implementation of the GENIUS Act. Our message is simple: GENIUS is landmark legislation designed to make the US the undisputed global leader in crypto and stablecoins. To make that happen, the… pic.twitter.com/XLyq15u0Ov

— Faryar Shirzad 🛡️ (@faryarshirzad) November 5, 2025

Coinbase warned that the Treasury must not interpret GENIUS’s interest ban incorrectly. Only approved payment stablecoin issuers (“PPSIs”) are prohibited by GENIUS from paying interest or yield in exchange for keeping or utilizing a stablecoin.

The crypto exchange claimed that prohibition does not apply to “indirect” payments or non-issuer intermediaries.

“GENIUS makes the U.S. the undisputed global leader in crypto and stablecoins. To make that happen, the implementing regs must stick to the clear intent of the bill text and must ensure that US-issued stablecoins have the versatility.”

–Faryar Shirzad, Chief Policy Officer, Coinbase.

The digital asset exchange emphasized that treating loyalty schemes or third-party benefits as forbidden “interest” would go against the text and intent of the Act and rewrite Congress’s carefully constructed lines. 

Additionally, by eliminating market-based incentives that reduce payment costs and encourage merchants, that misinterpretation would harm consumers. 

The exchange stated that to fully realize the potential of American stablecoin markets, the Treasury must guarantee that U.S.-issued stablecoins are competitive. The Treasury must also ensure U.S. stablecoin issuers have access to international markets.

Coinbase added that the Treasury should collaborate with other financial regulators to prevent fragmentation or disparate rules for similar products. Treasury must be careful not to interfere with current efforts by Congress or other federal authorities, as GENIUS is one of only a few federal initiatives to give transparency in digital asset markets.

Tax rules for payment stablecoins

Coinbase further suggested that, for accounting and tax purposes, payment stablecoins be regarded as cash equivalents.

According to Coinbase, payment stablecoins are a type of financial technology that mimics the functionality and stability of fiat money. This reality should be reflected in their tax treatment. The Treasury and the Internal Revenue Service (IRS) should take a “pragmatic, low-burden approach” to tax matters involving payment stablecoins.

Coinbase claimed that the application of taxes is one underestimated factor influencing the ultimate acceptance of digital asset innovation. In this case, the crypto exchange urged that tax guidelines should be revised to take into account the GENIUS framework. 

The exchange also emphasized that payment stablecoins should not be regarded as debt for tax reasons. Additionally, the IRS should provide precise and clear guidelines prohibiting payment stablecoins from being classified as debt instruments under federal income tax law.

For instance, brokers must submit Form 1099-DA to the IRS reporting transactions involving digital assets. The submission form will include gross revenues starting on January 1, 2025, and cost basis starting in 2026. IRS guidance also requires that the cost basis for digital assets be tracked on a per-wallet basis starting in 2025.

Coinbase claimed that the goal of the IRS guidelines is to standardize the calculation of taxable gains or losses from the sale of digital assets.

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