The U.S. Department of the Treasury is facing mounting pressure from both crypto firms and traditional banks over how it will implement the GENIUS Act — legislation that governs stablecoin payments in the United States.
In recent comments, Coinbase urged the Treasury to limit a ban on stablecoin interest payments to issuers only, while allowing non-issuers such as exchanges to continue offering yield products. The crypto exchange said this position aligns with Congress’s intent when drafting the law.
Banks Call for a Broader Ban
Meanwhile, traditional banking groups, led by the Bank Policy Institute (BPI), are pushing for a blanket prohibition on stablecoin interest payments that would include non-issuers and affiliated companies.
In a joint statement, BPI and several major banking associations asked the Treasury to “implement the GENIUS Act’s prohibition on the payment of interest or yield on payment stablecoins […] whether paid directly by an issuer or indirectly by an issuer’s affiliates or partners.”
The latest dispute follows the Treasury’s advance notice of proposed rulemaking (ANPRM), which closed this week. It marks the second round of public consultation on how to enforce the GENIUS Act.
Coinbase Defends Innovation and Congressional Intent
Coinbase argued that the Treasury must adhere to Congress’s original intent, which was to prevent stablecoin issuers from paying interest — but not to restrict non-issuer third parties.
“Congress went no further,” Coinbase said. “It declined to include non-issuer third parties within that prohibition because banning other types of payments on stablecoins across the board would have inhibited growth and innovation of the stablecoin market — contrary to the GENIUS Act’s core purposes.”
The company concluded, “Treasury has no authority to second-guess Congress’s work.”
Broader Implications for the Crypto Industry
Coinbase also asked regulators to exempt non-financial software developers, blockchain validators, and open-source protocols from the law’s scope. It further proposed treating payment stablecoins as cash equivalents for accounting and tax purposes.
In contrast, the banking sector argues that allowing stablecoin yields could lead to large capital outflows from traditional deposits, potentially destabilizing the financial system. BPI previously estimated that unrestricted stablecoin interest payments could trigger $6.6 trillion in deposit withdrawals.
The GENIUS Act, signed into law in July, is expected to take effect either 18 months after enactment or 120 days after final regulations are issued, which could place implementation in late 2026 or early 2027.
