After the country’s first stablecoin bill (the GENIUS Act) passed last year, the proposed crypto market structure bill, the CLARITY Act, faced significant delays in the US Congress, particularly due to growing opposition from the traditional banking sector.
In this climate, Coinbase’s Chief Policy Officer, Faryar Shirzad, has outlined five critical recommendations on what Congress should avoid when it comes to regulating stablecoins.
Coinbase CPO Urges Congress Not To Favor Banks
First, Shirzad cautioned against undermining the bipartisan goals established in the country’s stablecoin legislation, which was signed into law last year by President Donald Trump.
He stated that the GENIUS Act aims to strengthen the US dollar, increase demand for US Treasuries, and encourage digital asset innovation within the United States, rather than allowing this innovation to migrate to other countries, such as China.
Coinbase’s CPO said that any amendments to the rewards framework should reinforce these goals, not diminish them.
Shirzad also highlighted the importance of consumer interests, warning against legislative measures that might extract funds from consumers based on unverified claims regarding deposit flight risks.
He noted that stablecoins are designed to make transactions faster and more affordable, with banks themselves being among the foremost adopters.
Revisiting settled laws to favor banks and potentially hamper non-bank platforms would represent poor public policy, especially if rooted in unreliable premises, Shirzad claimed.
Potential Pitfalls For Stablecoins
The Coinbase official also emphasized the need for precise regulatory authority, advising Congress not to introduce vague enforcement powers that could be misused in the future.
Ambiguous regulations could allow succeeding administrations to undermine Congress’s original intent, which could inadvertently lead to the prohibition of lawful activities in the space. Therefore, Shirzad urged lawmakers to establish clear statutory guidelines that provide firm boundaries for any regulations.
Another critical point raised by Shirzad pertains to the need for legislation that does not disrupt existing lawful businesses. He claimed that the stablecoin ecosystem currently involves partnerships among issuers, platforms, and technology providers.
Coinbase’s CPO further claimed that any new legislation should set guidelines for the future rather than retroactively invalidate legitimate commercial agreements or target specific companies.
Finally, Shirzad called for Congress to listen to the voices of voters. While bank executives hold considerable political sway in Washington, he stated that ‘tens of millions of Americans” are invested in cryptocurrencies, and their opinions should carry equal weight. The Coinbase executive concluded:
Stablecoins strengthen the dollar, increase demand for U.S. Treasuries, and modernize payments. They’re also going to be a big commercial opportunity for banks of all sizes. Congress should focus on clear rules that allow innovation to grow in America — not policies that push it offshore.
Featured image from OpenArt, chart from TradingView.com
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