Blockchain Association seeks clearer Treasury stablecoin rules under GENIUS Act

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Blockchain seeks clear stablecoin rules

Highlights

Blockchain Association filed a 26-page letter urging the Treasury to tighten definitions in Section 3 of the GENIUS Act stablecoin rules, especially around digital asset service providers and core infrastructure exclusions.
The association opposes the Treasury's proposed liability standard for 'knowing participation' in unlawful stablecoin issuance, seeking to limit liability to cases of actual knowledge and substantial assistance coordinated with issuers.
The association requests revisions to due diligence requirements for foreign stablecoin issuers and challenges the 'reasonably believes' counterparty location standard, as the GENIUS Act is set to take effect in January 2027.

Industry comments target scope of stablecoin compliance rules

As reported by The Block, the Blockchain Association filed a 26-page letter on Monday responding to the Treasury Department's proposed rule for Section 3 of the GENIUS Act, which sets the terms for who can issue, offer and sell payment stablecoins in the U.S. The group says it supports the agency's broader goal of keeping payment stablecoins safe and backed by regulated issuers with adequate reserves, but argues that several definitions need to be tightened.

The association focuses in particular on the proposed definition of digital asset service providers, or DASPs, which would determine which businesses fall under parts of the stablecoin regime. It says Congress intended that definition to cover businesses serving customers, while excluding core infrastructure such as self-custody software and validators, and it warns that firms trading their own assets should not be captured by the rule.

The letter also challenges the Treasury's proposed treatment of "knowing participation" in unlawful stablecoin issuance, an area that could trigger criminal penalties. The association argues that liability should require actual knowledge and substantial assistance coordinated with an issuer, and says ordinary secondary-market trading should not be treated as participation.

Foreign issuer checks and DeFi standards remain key concerns

The group also asks Treasury to revise due diligence obligations tied to foreign payment stablecoin issuers. It says DASPs should not face open-ended due diligence requirements when they often have no direct relationship with those issuers, and instead recommends allowing firms to rely on regulators' public prohibition lists to meet compliance duties.

Another point of concern is the proposed "reasonably believes" standard for determining whether a counterparty is located in the U.S. The association says that standard should be replaced with one based on actual knowledge and information gathered in the ordinary course, arguing that participants in permissionless environments may interact only with a wallet address and receive no further identifying information.

Treasury's public comment period on the proposed GENIUS Act regulations closes on Monday with 123 submissions listed on the federal regulations portal. The law, described in the proposal as landmark stablecoin legislation signed last year, is expected to take effect in January 2027.

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