Coinbase Global Inc. has officially voiced its opposition to the U.S. Treasury’s proposed blanket ban on stablecoin yield, which it argues represents an overreach under the recently passed GENIUS Act. In a letter submitted on Tuesday, Coinbase contended that the yield ban should be limited solely to stablecoin issuers. The exchange emphasized that extending such a ban to entities not directly involved in issuance would contradict the intentions laid out by Congress.
“Congress went no further,” Coinbase highlighted in its correspondence, cautioning that broader regulations could stifle innovation and hinder the widespread adoption of stablecoins. The company expressed the view that the text of the GENIUS Act does not empower the Treasury to prohibit interest offered by exchanges or their affiliates. It further stressed that Treasury lacks the authority to renegotiate the legislative framework established by Congress.
In contrast, major banking associations, spearheaded by the Bank Policy Institute (BPI), have advocated for a comprehensive application of the yield ban to encompass all stablecoin entities. Their joint submission to the Treasury raised concerns that interest payments on stablecoins could pose a significant threat to traditional bank deposits, potentially siphoning off as much as $6.6 trillion. They called on the Treasury to enforce a prohibition on interest, regardless of whether it’s paid directly by issuers or indirectly through allied entities.
This latest input from the banking sector follows the second round of public feedback regarding the Treasury’s proposed rules under the GENIUS Act, with the consultation closing on Tuesday. This sets the groundwork for formal drafting of the regulations, anticipated for 2026.
The GENIUS Act, signed into law in July, aims to regulate payment stablecoins within the United States. Its provisions are set to come into effect either 18 months post-enactment or 120 days following the issuance of final rules by regulators, suggesting a possible implementation timeline of late 2026 or early 2027.
Coinbase has also called for the Treasury to exempt blockchain validators, software developers, and open-source protocols from the law. Furthermore, it advocates for treating payment stablecoins as cash equivalents for tax and accounting purposes. This ongoing discourse sheds light on the increasing friction between traditional banking institutions and digital asset platforms concerning their competing claims over the U.S. payments infrastructure.
