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Coinbase Global Inc. (NASDAQ:COIN) has challenged U.S. Treasury plans for a blanket ban on stablecoin yield, citing overreach under the GENIUS Act.
In a Tuesday letter, Coinbase urged the Treasury to restrict the yield ban only to stablecoin issuers.
The exchange said extending the rule to non-issuers would violate Congress's intent.
"Congress went no further," Coinbase wrote, warning that broader restrictions would hurt innovation and stablecoin adoption.
The company argued that the GENIUS Act's text does not give Treasury power to prohibit interest offered by exchanges or affiliates.
It said Treasury "has no authority to second-guess Congress's work."
Major banking associations led by the Bank Policy Institute (BPI) asked Treasury to apply the ban to all stablecoin entities.
Their joint filing said interest on stablecoins could drain as much as $6.6 trillion from traditional deposits.
They urged Treasury to "implement the prohibition whether paid directly by an issuer or indirectly by affiliates."
BPI's latest comments came during the second round of public feedback on Treasury's proposed GENIUS Act rules.
The consultation closed Tuesday, setting the stage for formal rule drafting in 2026.
Signed into law in July, the GENIUS Act regulates payment stablecoins in the United States.
It takes effect 18 months after enactment or 120 days after regulators issue final rules.
That timeline suggests implementation by late 2026 or early 2027.
Coinbase also asked Treasury to exempt blockchain validators, software developers, and open-source protocols from the law.
It urged that payment stablecoins be treated as cash equivalents for tax and accounting purposes.
The debate underscores widening tension between traditional banks and digital asset platforms over control of U.S. payments infrastructure.
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