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Coinbase dropped a 38-page bombshell on the U.S. Treasury yesterday, demanding the GENIUS Act be rewritten before it “accidentally bans the next Google.”
Chief Legal Officer Paul Grewal told reporters outside Treasury: “One vague sentence could force every DeFi dev to register as a bank. That’s not safety—that’s exile.”
The Guardrails for Emerging New Innovations in U.S. Systems Act, introduced by Sen. Kirsten Gillibrand (D-NY) in July, tasks Treasury with defining “covered digital asset service providers” within 180 days. Coinbase’s red flags:
– Scope creep: DAOs, node operators, and open-source coders could be swept in.
– Chokepoint 2.0: Banks already de-bank crypto; GENIUS would give them legal cover.
– Offshore magnet: Singapore licensed 22 new VASPs last quarter; the U.S. licensed zero.
Coinbase’s fix-it list:
- Safe-harbor for non-custodial wallets.
- 12-month sandbox for protocols under $50M TVL.
- “Actual control” test—only custodians need full broker rules.Numbers sting: U.S. crypto startups raised just $1.1 bn in Q3 vs $2.8 bn in UAE/Singapore combined. Coinbase stock dipped 3% pre-market on fears of another Operation Chokepoint.
Treasury must publish draft rules by January 17. Rival bill CLARITY, backed by Rep. Patrick McHenry, would split oversight between SEC and CFTC—Coinbase endorsed both in footnotes.
Industry chorus grows: Kraken, Ripple, and the Blockchain Association filed near-identical pleas. Chamber of Digital Commerce CEO Perianne Boring: “GENIUS without guardrails is genius-level stupid.”
Treasury quote: “All comments are under active review.” Translation: lobbyists, start your engines.
Bottom line for traders: GENIUS Act delay = relief rally. Bitcoin held $101K overnight; COIN calls for November 15 expiry jumped 42%.Search GENIUS Act Coinbase letter or crypto regulation 2026 for the full filing.
