The GENIUS Act, passed in July 2025, creates a federal framework for regulating stablecoins, requiring full backing by U.S. dollars or liquid assets, annual audits for issuers, and rules for foreign issuance to promote safe innovation in digital payments.
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Coinbase urges targeted Treasury regulations to support stablecoin innovation
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The Act mandates 100% reserve backing and holder priority in bankruptcy for stablecoins
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Implementation could position the U.S. as a global leader, with stablecoins used in 85% of cross-border payments by 2030 per industry estimates
Discover how Coinbase’s response to the GENIUS Act pushes for precise rules on stablecoins, boosting U.S. innovation and consumer protection. Learn key impacts today.
What is the GENIUS Act and how does it regulate stablecoins?
The GENIUS Act is landmark legislation passed into law in July 2025 that establishes a comprehensive federal framework for regulating payment stablecoins in the United States. It requires issuers to maintain 100% reserve backing with U.S. dollars or equivalent liquid assets, conduct annual audits for larger issuers, and prioritize stablecoin holders in bankruptcy proceedings. This approach aims to build trust, accelerate mainstream adoption, and solidify U.S. leadership in digital assets.
How should the U.S. Treasury implement the GENIUS Act according to Coinbase?
Coinbase’s response to the U.S. Treasury’s advance notice of proposed rulemaking emphasizes the need for precise, targeted regulations that align with the Act’s intent. The exchange highlights that proper implementation will foster innovation by ensuring stablecoins serve as reliable payment tools through federal oversight of issuers and full reserve requirements. According to Coinbase Chief Policy Officer Faryar Shirzad, “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.”
The firm warns against misinterpreting the Act’s prohibition on interest payments, which applies only to approved payment stablecoin issuers (PPSIs) and not to indirect payments or third-party intermediaries. Treating loyalty programs or merchant incentives as forbidden interest could undermine the Act’s goals, harm consumers by removing cost-reducing incentives, and limit stablecoin competitiveness. Coinbase stresses that U.S.-issued stablecoins must access international markets and that the Treasury should coordinate with other regulators to avoid fragmented rules.
Additionally, the exchange advocates for treating payment stablecoins as cash equivalents for tax and accounting purposes, reflecting their stability akin to fiat currency. This pragmatic approach, including clear IRS guidance against classifying them as debt instruments, would reduce burdens and encourage adoption. For instance, starting in 2025, brokers must report digital asset transactions via Form 1099-DA, tracking gross proceeds and cost basis per wallet to standardize gain calculations.
Industry experts, including those from the Blockchain Association, echo these sentiments, noting that cohesive rules could see stablecoin transaction volumes surpass $10 trillion annually by 2028, based on current growth trends from Federal Reserve data.
Frequently Asked Questions
What are the key requirements for stablecoin issuers under the GENIUS Act?
The GENIUS Act mandates that stablecoin issuers maintain 100% reserves in U.S. dollars or liquid assets, undergo annual audits for issuers above certain thresholds, and ensure holder priority in bankruptcy. It also sets rules for foreign-issued stablecoins to protect U.S. markets, promoting transparency and stability without stifling innovation.
How will the GENIUS Act impact stablecoin adoption in everyday payments?
The GENIUS Act will boost stablecoin use in daily transactions by establishing trusted federal oversight, making them as reliable as traditional money. With full backing and clear regulations, consumers and merchants can confidently integrate stablecoins for faster, lower-cost payments, potentially revolutionizing e-commerce and remittances.
Key Takeaways
- Targeted Implementation: Coinbase calls for regulations that preserve the GENIUS Act’s intent, avoiding overreach on interest bans to keep stablecoins versatile and competitive globally.
- Tax Treatment Clarity: Treating payment stablecoins as cash equivalents simplifies reporting, with IRS Form 1099-DA ensuring accurate tracking of digital asset gains starting 2025.
- U.S. Leadership: Coordinated rules across regulators will prevent fragmentation, positioning American stablecoins at the forefront of a market projected to handle trillions in annual volume.
Conclusion
The GENIUS Act represents a pivotal step in regulating stablecoins through robust federal standards on reserves, audits, and issuer oversight, as highlighted in Coinbase’s detailed response to the U.S. Treasury. By advocating for precise implementation that supports innovation and consumer safeguards, the exchange underscores the potential for U.S.-issued stablecoins to drive global digital payment leadership. As regulations take shape, stakeholders should monitor developments closely to capitalize on emerging opportunities in this transformative space.
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
“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.
