Crypto exchange Coinbase (NASDAQ:COIN) has recently called on the US Treasury Department to ensure that its rules and guidelines for the GENIUS Act are aligned and consistent with congressional objectives. Digital assets firm Coinbase noted that Treasury needs to avoid enforcing requirements that go beyond what the actual statute has outlined, cautioning that any overreach may negatively impact product development and tech advancements.
It may also actually end up undermining or lessening the impact of the law’s aim of making the United States the so-called “crypto capital” of the world under the Trump Administration.
Faryar Shirzad, the Chief Policy Officer at Coinbase, has noted via social media that implementing regulations must stick with the actual intent of the bill text and must ensure that U.S.-issued stablecoins have the “versatility” as well as the competitiveness required to become the world’s leading payment and settlement instrument.
Importantly, Coinbase has asked regulatory authorities to go for a rather narrow / focused interpretation of the legislation, by not counting non-financial software solutions, so-called blockchain network validators, as well as any open-source protocols from its oversight.
It stated that the Act’s interest-payment prohibition is applicable strictly to stablecoin issuers and not to any third-parties / intermediaries or exchanges that offer special incentives or customer reward programs.
Coinbase also pointed out that treating third‐party rewards or loyalty programs as non-permissible “interest” might end up rewriting Congress’s meticulously-outlined boundaries and also potentially conflict with the statuteʼs text and intended purpose.
Coinbase further recommended that payment stablecoins be treated as cash equivalents for tax and accounting purposes.
The crypto exchange also mentioned that payment stablecoins are a type of financial technology that by its very design and core function aim to replicate the stability and utility of fiat currency.
Therefore, their tax treatment must accurately reflect this fact.
Coinbase indicated that the Treasury and the Internal Revenue Service (IRS) should take on a more pragmatic, low-burden approach to tax-related matters as they might pertain to payment stablecoins.
The GENIUS Act, which became law in July of this year, provides a federal level framework and specific set of guidelines in order to properly regulate stablecoin transfers.
The Act requires stablecoins to be backed completely by US dollars and/or the equivalent in liquid assets. It also asks for yearly / regular audits for several such issuers along with providing clear rules for overseas issuance processes.