Key insight: The Federal Deposit Insurance Corp. Tuesday issued a proposed rule that would set up a process for banks to issue payment stablecoins, pursuant to the recently-passed GENIUS Act stablecoin legislation.Supporting data: Under the proposed rule, bank applications to issue stablecoins would be automatically approved after 120 days of inaction.Forward look: Acting FDIC Chair Travis Hill says the agency will continue to issue implementing regulations, including forthcoming capital and liquidity stand ...

Core Viewpoint - Circle submitted a comment letter to the U.S. Department of the Treasury regarding the GENIUS Act, advocating for a national framework for payment stablecoins that supports users, issuers, and intermediaries across U.S. markets [1] Policy Principles and Supervision - Circle proposes that payment stablecoins be fully backed by cash and high-quality liquid assets, kept separate from company funds, and redeemable at par on demand, with independent monthly checks and plain language reports for verification [3] - The company emphasizes a level playing field for both bank and nonbank issuers under a common prudential baseline, and calls for a reciprocal path for foreign regimes that meet GENIUS standards [4] - Circle supports predictable penalties and safe harbor protections for compliance with lawful orders, along with tested wind-down plans for quick and fair return of customer funds across borders [5] Market Use, Global Reach, and Accounting Treatment - Circle requests clarification from the Treasury on how permitted U.S. issuers can operate globally to ensure practical conversion between dollars and tokens for businesses [6] - The submission recommends that permitted payment stablecoins be treated as cash and cash equivalents for accounting and tax purposes, aligning financial reporting with the fully reserved model [7]

Core Viewpoint - Coinbase Global has urged the US Treasury Department to ensure that the upcoming rules for the GENIUS Act align with Congress's original intent to avoid excessive regulation that could hinder innovation in the crypto space [1][3][9] Regulatory Concerns - The exchange warned that excessive regulation could stifle innovation and undermine US leadership in the cryptocurrency sector [3] - Coinbase's Chief Policy Officer emphasized the need for regulations to adhere closely to the bill's text, ensuring US-issued stablecoins maintain their competitiveness as a global payment and settlement instrument [4] Scope of Regulation - Coinbase called for a narrow interpretation of the GENIUS Act, specifically excluding non-financial software developers, blockchain validators, and open-source protocols from regulatory oversight [4][9] - The company clarified that the prohibition on interest payments under the GENIUS Act applies only to stablecoin issuers, not to exchanges or intermediaries offering loyalty or rewards programs [5] Tax and Accounting Proposals - Coinbase proposed that payment stablecoins be recognized as cash equivalents for tax and accounting purposes, arguing that their design is similar to fiat currency [6] - The exchange urged the Treasury and the Internal Revenue Service to adopt a pragmatic approach to taxation for payment stablecoins to reduce the regulatory burden [6] Industry Impact - The GENIUS Act, enacted in July 2025, establishes the first federal framework for regulating stablecoins, requiring tokens to be fully backed by US dollars or equivalent liquid assets and mandating annual audits for large issuers [7] - Coinbase's comments reflect growing industry concerns regarding how the law's implementation could impact the balance between innovation, investor protection, and global competitiveness in the stablecoin sector [7][9] Position on Stablecoins - Coinbase rejected claims that the growth of stablecoins could deplete deposits from US banks, arguing instead that stablecoins reinforce the dollar's global dominance [8]