Blockchain Association Calls for Sharper Boundaries in Treasury’s GENIUS Act Stablecoin Rules

The Blockchain Association submitted a detailed 26-page comment letter on October 19, 2026, responding to the U.S. Department of the Treasury’s proposed regulations implementing Section 3 of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.

Section 3 establishes the core framework for who may issue, offer, or sell payment stablecoins in the United States, including limitations that take full effect in stages through 2028.

The industry group, which represents a broad range of blockchain companies, endorsed Treasury’s overall direction.

It praised the agency’s focus on the statute’s text rather than forcing stablecoins into older securities or commodities regimes, as well as its emphasis on administrable standards that channel activity toward compliant issuers.

At the same time, the Association argued that the draft needs tighter language to match congressional intent and avoid unintended consequences for decentralized finance, secondary-market activity, and foreign-issued tokens.

A central request involves the definition of a “digital asset service provider.”

Under the statute, this category covers entities that, for compensation or profit, engage in the business of exchanging, transferring, or custodial services for digital assets, generally on behalf of customers.

The Association urged Treasury to make explicit that proprietary trading of a firm’s own assets does not itself trigger service-provider status, and that statutory exclusions for self-custodial software interfaces, transaction validation, and certain peer-to-peer liquidity mechanisms should be restated directly in the final rule rather than merely cross-referenced.

The group emphasized that infrastructure operators and firms managing their own inventories should not be swept into intermediary obligations designed for customer-facing businesses.

On criminal liability for “knowingly participating” in an unlawful issuance, the letter called for a higher threshold.

Liability, the Association said, should require actual knowledge of the facts that render an issuance unlawful, plus affirmative and substantial assistance coordinated with the issuer.

Ordinary market-making or secondary market trading of already-issued stablecoins should not qualify.

The group also warned against interpretations that could effectively advance the July 2028 compliance date Congress set for broader platform restrictions.

Foreign-issued payment stablecoins drew particular attention.

Treasury’s proposal contemplates due-diligence expectations for platforms that offer such tokens to U.S. persons.

The Association contended that many exchanges and service providers lack any direct contractual relationship with overseas issuers and therefore cannot reasonably perform open-ended investigations into their systems or future compliance.

Instead, it recommended that firms be permitted to rely on publicly maintained regulatory lists of registered foreign issuers, effective trading prohibitions, and notices of rescission or revocation, unless they possess actual knowledge of contrary material facts.

Additional points addressed location determinations in permissionless environments, where counterparties may be identifiable only by wallet addresses.

The Association asked Treasury to replace a “reasonable belief” standard with one grounded in actual knowledge and information obtained in the ordinary course of business, without imposing new identification duties when data is unavailable.

It also requested that any expansion of the payment-stablecoin definition avoid an open-ended “functional equivalent” test for monetary value, that cost estimates be revised to reflect a potentially larger universe of affected entities, and that effective dates be coordinated with related GENIUS Act rulemakings by other regulators. The comment period closed on the day of the filing. Treasury is now reviewing submissions before finalizing the rule, which forms one piece of the broader federal stablecoin framework enacted in July 2025.