Coinbase Urges U.S. Treasury to Clarify Crypto Rules Under the GENIUS Act

One of the largest cryptocurrency exchanges in the United States, Coinbase, is urging the U.S. Treasury to provide more clarity on the implementation of the GENIUS Act. Coinbase issued a response to the Treasury warning that excessive regulation threatens the act’s purpose of strengthening blockchain and crypto innovation in the United States and ultimately mitigates the United States’ position as a leader in the global crypto landscape. They further highlight the importance of clear, measured rulemaking in ensuring that American stablecoins remain globally competitive.

The GENIUS Act, signed into law in July 2025, is the country’s first attempt at establishing a regulatory framework for stablecoins. The law stipulates that stablecoins must have full liquid asset backing, annual audits of stablecoin holders, and restrictions on coins issued by foreign countries. The law was initially celebrated as a bipartisan leap forward in the regulatory uncertainty of digital currencies such as stablecoins, but has recently seen criticism from crypto industry experts.

The GENIUS Act resembles similar regulatory crackdowns that occurred in the online casino industry, and the rules surrounding stablecoins mirror those under which crypto casinos currently operate. Under these rules, online casinos with bitcoin deposits continue to transform the crypto gambling industry by enabling fast and secure withdrawals, provably fair games, and bigger bonuses.

In its response to the Treasury, Coinbase listed principles that are designed to assist regulators in drafting regulations that meet Congress’s intentions while still allowing innovation in the stablecoin market to thrive. Coinbase’s Chief Policy Officer, Faryar Shirzad, went on to state that Congress must ensure that regulatory frameworks are developed that allow U.S. stablecoins to remain competitive around the world. He implored the Treasury to place its focus on transparency, interoperability, and innovation, instead of creating a framework that punishes responsible stablecoin users through policies that are not clearly defined and contain heavy restrictions.

In Coinbase’s letter, several recommendations were made to clarify the GENIUS Act’s position on stablecoins. The first proposal is that non-financial software developers, blockchain validators, and open-source protocol maintainers should be given an exemption from the Act’s compliance rules. Coinbase highlights this group’s importance in maintaining the essential infrastructure that keeps crypto markets running. Further proposals include Coinbase’s request that the Act’s ban on paying interest to stablecoin holders apply only to the issuers of stablecoins. The last proposal made in Coinbase’s letter was for payment in stablecoins to be seen as equivalents to cash for accounting and tax purposes.

Coinbase also warned the Treasury that broad definitions in the Act could have major unintended consequences. As an example, they highlight how the word “interest” could have many definitions. They go on to note that while the Act was created with the goals of consumer trust and innovation in the digital payments sector in mind, excessive regulatory layering and ambiguous definitions could have the opposite effect.

In addition to Coinbase’s criticism of the Act, many lawmakers remain divided on the consequences of the GENUIS Act as well. While some argue that the Act represents overregulation and poses rules that are too strict, others, including Senator Elizabeth Warren, have warned that the law favors the crypto industry too much. She has gone on record calling it a “soft regulatory framework.” Senator Warren continues to advocate for stronger regulation of the crypto industry, believing that it is in the best interests of consumers and traditional financial institutions.

As this matter continues and the crypto market continues to evolve, the regulations stipulated in the GENIUS Act are likely to influence more than the operations of domestic crypto companies. They will likely also influence the United States’ global perception as a leader for financial technology and digital innovation.