The US-based cryptocurrency exchange, Coinbase, emphasized that the regulations prepared under the GENIUS Act, which came into effect in July, must strictly adhere to the framework set by Congress. The company warned that if the Treasury Department imposes broader obligations than those anticipated by the law, innovation could be hindered, potentially weakening the US’s goal of global cryptocurrency leadership.
Coinbase Calls for Textual Interpretation
In a detailed response submitted to the US Treasury Department, Coinbase urged regulators to interpret the law narrowly. The exchange requested that non-financial software, blockchain validators, and open-source protocols be excluded from regulatory oversight.
Coinbase Policy Director, Faryar Shirzad, stated on his social media account that regulations must stay true to the clear intent of the law. He emphasized that US-based stablecoins should become the most competitive tools in global payments and settlements.
Coinbase also highlighted that the interest payment ban clause of the law should only apply to stablecoin issuers. Reward programs offered by exchanges or third parties should not be evaluated within this scope, as considering loyalty points or rewards as interest would violate Congress’s clear boundaries.
Proposed New Definition for Taxation and Accounting
Coinbase argued that payment stablecoins should be deemed cash equivalents for tax and accounting purposes. According to the company, these types of cryptocurrencies possess the same stability and usability as fiat currencies. Therefore, it recommended that the Treasury Department and IRS adopt a pragmatic and low-burden approach towards payment stablecoins.
Notably, the GENIUS Act stands out as the first law to introduce a comprehensive federal framework for the stablecoin market in the United States. The regulation mandates that all stablecoins be backed by US dollars or similar liquid assets, requires annual audits for certain issuers, and includes guiding principles for foreign issuances.
