The Blockchain Association has called on the U.S. Treasury to clarify and narrow the scope of its proposed rules on stablecoin issuance, urging the department to set a stricter standard before finding crypto companies in violation of the GENIUS Act.
Industry seeks clear separation between issuers and service providers
The industry group submitted a 26-page comment letter on October 19, marking the final day for public feedback on Treasury’s proposal to implement Section 3 of the new stablecoin law. This section determines which entities are permitted to issue payment stablecoins in the United States, as well as the conditions under which digital asset service providers (DASPs) may sell or offer these coins to U.S. residents.
According to the letter, the Blockchain Association asked Treasury to ensure that allegations of “knowing” participation in an unlawful stablecoin issuance meet a high bar. The group requested that Treasury confirm the requirement for actual knowledge of facts that render an issuance unlawful, with industry participants able to rely on declarations made by the issuer.
Routine market making and trades in secondary markets should not be deemed violations except in cases where firms provide what the letter described as “affirmative, substantial assistance in coordination with the issuer who issues a stablecoin.” The association also stressed the importance of ensuring that the rules do not effectively move the compliance date set by Congress, currently July 18, 2028, for DASPs.
DeFi and market participants voice concerns over compliance burden
Another central request was for Treasury to remove a geographic test that would find a violation if a company “reasonably believes” a counterparty is outside the United States. Instead, the association proposed a standard requiring “actual knowledge and information reasonably obtained in the ordinary course of a transaction.”
DeFi protocols and market participants often interact only with wallet addresses and may lack identifying information about counterparties. The letter argued that such realities make the existing test impractical for decentralized platforms.
The association stated that the DASP definition should apply exclusively to service providers, with exceptions maintained for self-custody software, validators, and liquidity pools as imposed by Congress. A firm trading its own assets, even on decentralized exchanges, should not be considered a DASP solely for that activity.
Exemptions for self-custody tools and liquidity pools reflect Congress’s judgment that public blockchain infrastructure is not the same as a service provider under the law.
Additionally, the Blockchain Association argued that DASPs should not be compelled to conduct indefinite due diligence on foreign stablecoin issuers. Instead, it requested the ability to depend on regulators’ public lists of approved and prohibited issuers.
Regulators emphasize transparency and industry feedback
Treasury introduced the rule proposal on August 17. Treasury Secretary Scott Bessent stated the department is “welcoming input from stakeholders as we work to provide the regulatory certainty businesses need.”
The association’s letter noted that the present proposal does not designate a specific effective or compliance date for Part 1523 and urged Treasury to ensure that any final rule takes effect no earlier than the latest related GENIUS Act rule. Some related rule proposals, including one from the Federal Reserve in September, remain under review.
The stablecoin law will apply from January 18, 2027, or 120 days after regulators complete their rules, whichever comes first.
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