Coinbase Policy Officer Faryar Shirzad stated on X.com, “Implementation rules should stick to the clear purpose of the bill text and ensure that U.S.-issued stablecoins maintain flexibility and competitiveness needed to become a global payment standard.” This statement highlights the importance of supporting innovation while promoting stablecoins as a payment tool.

Impact on Innovation and Stablecoin Recommendations

Building on its call for focused regulation, Coinbase urged regulators to interpret the law narrowly. The company noted that the GENIUS Act’s prohibition on interest payments applies only to stablecoin issuers, not to intermediaries or exchanges offering loyalty rewards. “Treating third-party rewards as prohibited ‘benefits’ would rewrite carefully drawn lines and contradict the law’s intent,” the company warned.

Moreover, emphasizing the practical implications of the law, Coinbase recommended that payment stablecoins be treated as cash equivalents for tax and accounting purposes. Shirzad added, “Payment stablecoins reflect the stability of fiat currency. They also provide similar utility in their design and function. Tax practices should recognize this fact. Tax practices should recognize this fact.” Finally, the company encourages the Treasury and IRS to adopt a pragmatic, low-cost approach regarding stablecoin taxation and regulation.

GENIUS Act: Federal Framework and Requirements

The GENIUS Act, passed in July 2025, establishes a federal framework for stablecoins in the U.S. The law mandates that stablecoins be fully backed by U.S. dollars or equivalent liquid assets, requires annual audits for certain issuers, and provides guidance for foreign stablecoin issuers.

Coinbase’s warning underscores the need to implement regulations without stifling innovation, ensuring the U.S. maintains a leading position in the crypto ecosystem. The guidance also seeks to guarantee that developments in stablecoin payments align with global financial systems.

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A New Mandate from Congress

The appropriations bill, introduced by Republican Representative David P. Joyce, gives the Treasury 90 days to deliver its findings. The report must cover several critical areas, including:

• Secure custody methods for Bitcoin and other digital assets

• Legal authority of the federal government to hold these assets

• Cybersecurity protections

• Mechanisms for interagency transfers

• Accounting treatment of digital assets on the federal balance sheet

• Potential involvement of third-party custodians

Additionally, the Treasury is asked to assess how such a reserve might impact the Treasury Forfeiture Fund.

Origins of the Strategic Bitcoin Reserve

In March 2025, President Donald Trump signed an executive order authorizing the creation of a Strategic Bitcoin Reserve alongside a digital asset stockpile. Under this order, cryptocurrencies seized by the government would be allocated toward building the fund.

Treasury Secretary Scott Bessent later emphasized that the department is working on “budget-neutral approaches” to strengthen the Bitcoin reserve without creating additional financial burdens.

The Global Push for Crypto Reserves

The United States is not alone in exploring digital asset reserves. Similar moves are emerging across the globe:

• Kazakhstan’s President Kassym-Jomart Tokayev recently unveiled plans for a state-backed digital asset fund, aimed at accumulating promising assets in the evolving financial system.

• In the Philippines, lawmakers have floated a proposal to establish a 10,000-Bitcoin reserve, which would make the country the first in Southeast Asia to recognize Bitcoin as a strategic state asset.

At present, countries collectively hold over 517,000 BTC, accounting for roughly 2.46% of Bitcoin’s total circulating supply, according to available data.

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The first executive action mandates that the Treasury Department use electronic payments whenever possible, moving away from paper checks. This shift aims to streamline payments and reduce the risk of fraud and waste. The second executive order orders the federal government to cease issuing paper checks by the end of the fiscal year, September 30, 2025, and transition to direct deposit, prepaid accounts, and other digital payment options.

At a White House briefing, Trump stated, “We’re doing this, and we have other modernization programs going on. These are steps that should have taken place decades ago.”

Addressing Fraud and Waste in Federal Payments

The initiative is part of the Trump administration’s continued efforts to tackle fraud within the Treasury’s payment system. Notably, members of Elon Musk’s Department of Government Efficiency were granted access to Treasury’s payment database at the start of Trump’s presidency, though this has sparked privacy concerns and legal disputes.

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

orders also direct agency heads to collaborate with the Treasury Department to ensure payments are directed to their intended recipients, introducing more rigorous controls to safeguard taxpayer funds.

Shift to Digital Payments

The vast majority of federal payments, including Social Security, food stamps, and tax refunds, are already made through electronic means, and the federal government has been pushing for years to transition fully to digital payment methods. The Treasury Department aims to increase the disbursement rate for non-tax-related payments to 98.4% by 2025.

Trump on Tariffs: “Customs Tariffs Will Create More Jobs”

In addition to the payment modernization efforts, President Trump emphasized the economic benefits of customs tariffs, suggesting that they would drive job creation and strengthen the economy. His administration continues to implement trade policies designed to boost domestic manufacturing and reduce reliance on imports.

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Cryptocurrency Explotation by Terrorist Groups

Adeyemo underscored instances where terrorist groups based in Syria utilized Bitcoin for money laundering, facilitated by social media platforms to solicit cryptocurrency donations. Furthermore, analysts noted that the Islamic Revolutionary Guard Corps-Quds Force actively transferred cryptocurrency to Hamas and the Palestinian Islamic Jihad (PIJ) in Gaza, exploiting the anonymity afforded by digital assets and exacerbating the issue.

The Challenges of Cryptocurrency Transactions

The anonymity inherent in cryptocurrency transactions poses significant challenges, enabling bad actors to conceal their identities and evade traditional financial scrutiny. Consequently, combating illicit finance becomes increasingly complex as terrorist organizations and other malign actors leverage digital assets to circumvent regulatory oversight.

Proposed Reforms by the Treasury Department

To address these pressing concerns, the Treasury Department proposes a multifaceted approach. This includes the introduction of a secondary sanctions tool targeting foreign digital asset providers facilitating illicit finance. Additionally, modernizing existing authorities to explicitly cover key players and activities within the digital asset realm is paramount. Moreover, the proposed reforms identify mitigating jurisdictional risks posed by offshore cryptocurrency platforms as a critical component.

In conclusion, Adeyemo’s call to action urges collaborative efforts within the community to support the Treasury Department’s proposed reforms. As the threat of cryptocurrency misuse by terrorist groups continues to grow, proactive measures are essential to safeguard American interests and combat illicit finance within the digital asset ecosystem.

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