US Treasury Faces Industry Tug-of-War Over GENIUS Act Stablecoin Rules
The US Department of the Treasury is grappling with sharply divided input from cryptocurrency firms and traditional banks on how to implement the GENIUS Act, the landmark law regulating stablecoin payments in the United States.
In a letter submitted on Tuesday, Coinbase urged the Treasury to confine any ban on stablecoin interest payments solely to stablecoin issuers, arguing that exchanges and other non-issuer platforms should remain allowed to provide yields. According to Coinbase, this approach aligns with Congress’s original intent when passing the legislation.
Banks Push for Broad Ban on Stablecoin Yields
Conversely, major banking groups, spearheaded by the Bank Policy Institute (BPI), advocate for a broad prohibition that would encompass all digital asset service providers, including exchanges and affiliates. In a joint statement released on Wednesday, BPI emphasized that the GENIUS Act’s ban should cover both direct payments from issuers and indirect payments made by partners or affiliates.
BPI and other traditional banking associations previously expressed concern that permitting stablecoin interest could trigger massive outflows from the banking system, estimating a potential $6.6 trillion in risked deposits if the market were left unchecked.
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Coinbase Calls for Congressional Intent to Prevail
Coinbase countered that the Treasury must respect Congress’s intent, which deliberately excluded non-issuers from the ban. The company warned that a blanket prohibition could stifle growth and innovation in the stablecoin ecosystem, running counter to the GENIUS Act’s purpose.
“Treasury has no authority to second-guess Congress’s work,” Coinbase stated, insisting that non-issuer entities, such as exchanges, software developers, blockchain validators, and open-source protocols, should be excluded from restrictions. The firm also recommended that payment stablecoins be treated as cash equivalents for accounting and tax purposes, ensuring seamless integration into existing financial systems.
Timeline for GENIUS Act Implementation
Signed into law in July 2025, the GENIUS Act is slated to take effect either 18 months after enactment or 120 days after federal regulators issue final rules, placing the expected implementation window in late 2026 or early 2027. Meanwhile, the Treasury’s advance notice of proposed rulemaking (ANPRM) attracted its second round of public comments, highlighting the ongoing debate between traditional banks and crypto innovators.
