Coinbase Challenges Treasury’s Stablecoin Interest Ban Under GENIUS Act

Coinbase has taken a firm stance against the U.S. Treasury Department's interpretation of the GENIUS Act, specifically targeting the ban on stablecoin interest payments. The exchange argues that the prohibition should not extend to third-party platforms, emphasizing that Congress did not intend to restrict yield programs offered by non-issuers. This debate stems from a provision enacted in July that bars stablecoin issuers from paying interest, a move that Coinbase believes oversteps regulatory boundaries. As of November 9, 2025, the outcome of this challenge could significantly impact the broader cryptocurrency market, particularly for platforms offering yield-generating products.

Coinbase Challenges Treasury's Interpretation of GENIUS Act Stablecoin Interest Ban

Coinbase has formally responded to the U.S. Treasury Department's proposed implementation of the GENIUS Act, arguing that restrictions on stablecoin interest payments should not apply to third-party platforms. The exchange contends that Congress never intended to prohibit yield programs offered by non-issuers.

The debate centers on a July-enacted provision banning stablecoin issuers from paying interest. Coinbase's November 4 letter warns that overbroad interpretation could stifle innovation, claiming its USD Coin rewards program operates within legal boundaries. This stance pits crypto firms against traditional bankers seeking stricter enforcement.

Market observers note the outcome could significantly impact stablecoin adoption. Platforms like Coinbase currently attract billions in deposits through yield products. The Treasury's final rules may determine whether these offerings survive regulatory scrutiny.

Bitcoin Trades at Discount on Coinbase Amid Softening US Demand

Bitcoin is trading at a discount on Coinbase compared to global exchanges, signaling weakened spot demand in the US market. The price discrepancy reflects oversupply from institutional investors and ETF-related selling pressure—a pattern historically associated with downward momentum.

Analysts note the discount, while not as severe as previous cycles, rarely precedes local price bottoms without sustained selling. "This mirrors ETF flow data," says trader Daan Crypto Trades. "Negative Coinbase premiums aren't bullish, but recovery hinges on Bitcoin absorbing this pressure."