US bankers are urging the US Treasury to enforce the ban on interest on stablecoin payments in the GENIUS Act. In response, cryptocurrency exchange Coinbase called on the Treasury Department to ensure that upcoming regulations are consistent with Congress’ original intentions regarding this law.
Coinbase rolls back interest restrictions under the GENIUS Act
According to the bill, which President Trump signed in July, “no payment to the issuer of the stablecoin or foreign payment is permitted Stablecoin source The holder of any Payment Stablecoin shall be paid any form of interest or return (whether in cash, tokens or other consideration) solely in connection with the possession, use or holding of such Payment Stablecoin.”
However, companies like Coinbase are exploring a potential loophole that they believe will allow them to continue offering returns on stablecoin deposits. They argue that since these platforms are not the issuers of stablecoins, the ban does not apply to them.
Coinbase letter To the Treasury was a direct response to advance notice regarding implementation of the GENIUS Act. In this letter, dated November 4, Coinbase argued that construing third-party rewards or loyalty programs as prohibited “interests” would fundamentally alter the intent of Congress and run counter to the letter and intent of the law.
The letter warned that any misinterpretation of the GENIUS Act could harm consumers by eliminating market-based incentives that reduce payment costs, encourage merchant acceptance, and help new users adopt U.S. regulated stablecoins.
The banking sector unites against stable interest rates
The banking sector’s response has been strong, with the Consumer Bankers Association, the American Bankers Association, the Banking Policy Institute, the Financial Services Forum, and the Clearing House Association collectively representing the interests of US banks.
They emphasized that Congress intends to interpret the interest ban on stablecoins broadly. they letter He noted that any interest or royalty payments prohibited by the GENIUS Act must include any economic benefits provided by issuers, directly or indirectly, including those through subsidiaries or partners.
They warned that allowing stablecoin interest would effectively turn these digital assets into investment products, which could lead consumers to view stablecoins as akin to bank accounts, which could lead to a “deposit flight” that threatens banks’ ability to generate credit.
In addition to concerns regarding interest payments, Coinbase has also raised issues regarding interest payments appreciationn stablecoins. The company argued that stablecoins should be classified as pure payment instruments for tax purposes, rather than as forms of debt or investment.
They assumed that treating stablecoins for payment as debt would introduce unnecessary complexity into the financial system. Instead, Coinbase has advocated for these stablecoins to be considered cash equivalents, which would simplify their tax treatment and support their intended use as payment mechanisms.
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The post Coinbase Submits Feedback To Treasury: Calls For Strict Compliance With GENIUS Act Objectives first appeared on Investorempires.com.
