Coinbase Fights for Developers’ Freedom in GENIUS Act Rulemaking

Coinbase has called on the U.S. Treasury Department to take a restrained approach in drafting rules under the GENIUS Act, warning that broad interpretations could exceed Congress’s intent and hinder blockchain innovation.

In a letter submitted this week, the exchange urged Treasury to clearly define the law’s scope, emphasizing that non-financial software developers, blockchain validators, and open-source protocols should be explicitly excluded from regulatory oversight.

Coinbase Calls for a Narrow Interpretation

Coinbase argued that the GENIUS Act, enacted in July 2025 as the first comprehensive U.S. stablecoin framework, was intended to regulate issuers of payment stablecoins, not the broader crypto ecosystem. The company cautioned that extending its reach could “unintentionally stifle innovation” and deter domestic blockchain participation.

“The Treasury should follow congressional intent, not expand it,” Coinbase wrote, stressing the need for balanced oversight that protects consumers without undermining open-source and non-financial technology development.

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Clarifying the Stablecoin Interest Ban

The firm also addressed one of the most contentious provisions of the GENIUS Act – the ban on interest-bearing stablecoins. Coinbase maintained that the restriction applies only to stablecoin issuers, not to exchanges or platforms that offer reward or yield programs linked to user balances.

If adopted, this interpretation would permit platforms like Coinbase to continue offering yield incentives on stablecoin holdings, even though issuers themselves remain barred from paying interest directly.

Industry Divide Widens

Coinbase’s position contrasts sharply with that of major banking associations, which have urged Treasury to apply a blanket prohibition on all forms of stablecoin interest to prevent what they describe as “regulatory loopholes.”

As Treasury moves closer to releasing its proposed rulemaking, Coinbase’s letter highlights the growing divide between crypto firms and traditional banks over how far stablecoin regulation should extend – and who it should govern.