The Blockchain Association is asking the U.S. Treasury to set a higher bar before a crypto company can be found to have taken part in an unlawful stablecoin issuance under the GENIUS Act, and to leave traders and decentralized finance (DeFi) infrastructure outside the rule’s reach.
The industry group filed a 26-page comment letter dated Oct. 19, the last day Treasury accepted feedback on its proposed rule implementing Section 3 of the stablecoin law. That section governs who may issue payment stablecoins in the U.S. and when digital asset service providers (DASPs) may offer or sell them to people here. In a post on X, the group said its letter “seeks clearer lines so the final rule matches what Congress wrote.”
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Knowledge, Not Belief
Treasury’s proposal lists three non-exclusive examples of “knowing” participation in an unlawful issuance, one of which covers market making and distributing newly issued coins. The association asked Treasury to confirm that the standard “requires actual knowledge of the underlying facts that make an issuance unlawful” and that firms may rely on what an issuer tells them. Routine market making and secondary trading should not count, the letter said, unless a firm provides “affirmative, substantial assistance in coordination with the issuer who issues a stablecoin.”
It also asked Treasury to make sure the provision “does not, in practice, accelerate the July 18, 2028, compliance date” Congress gave DASPs.
On geography, the group wants Treasury to scrap a test that turns on whether a firm “reasonably believes” a counterparty is outside the U.S. In its place, it proposed “a standard based on actual knowledge and information reasonably obtained in the ordinary course of a transaction,” arguing that a firm working in DeFi “may interact only with a wallet address” and have no way to see who is behind it.
Who Counts as a Service Provider
The association said the DASP label should apply to service providers alone, and that Treasury should honor the carve-outs Congress wrote for self-custody software, validators and liquidity pools. The letter said those exclusions “reflect a deliberate congressional judgment” that such public blockchain infrastructure is not a service provider. A firm that trades with its own money, on decentralized exchanges or elsewhere, should not become a DASP for that reason alone, it added.
The group also wrote in the letter that Treasury “should not require DASPs to conduct open-ended due diligence on foreign payment stablecoin issuers” and asked that firms be allowed to rely on regulators’ public lists of approved and barred issuers instead.
No Date Set Yet
Treasury announced the proposal on Aug. 17, with Treasury Secretary Scott Bessent saying the department “welcomes input from stakeholders as we work to provide the regulatory certainty businesses need.” The letter noted that the proposal “does not specify an effective date or compliance date for Part 1523” and asked that the rule take effect no earlier than the latest related GENIUS Act rule, several of which are still proposals, including one the Federal Reserve proposed in September.
The law starts applying on Jan. 18, 2027, or 120 days after regulators finalize their rules, whichever is earlier.
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