The Blockchain Association has asked the U.S. Treasury Department to narrow and clarify the reach of proposed stablecoin rules, arguing that obligations intended for financial intermediaries should not spread indiscriminately to software infrastructure or ordinary trading.
The group filed its response on October 19 to Treasury’s proposal implementing Section 3 of the GENIUS Act. The submission supports the framework’s core purpose while disputing how particular definitions and compliance tests would work, according to The Block’s report on the letter.
The requests concern a proposed rule. They do not create exemptions for developers, change the law or establish that Treasury has accepted the industry’s interpretation.
The debate starts with who is providing a service
The association wants a clearer distinction between businesses serving customers and infrastructure such as self-custody software or validators. It also argues that firms trading their own assets should not automatically be treated like intermediaries.
That boundary can determine who needs to build compliance systems and assess which stablecoins may be offered. Writing software, using an asset and selling it to customers are different activities; a broadly interpreted definition can connect obligations to more than the business that originally issues a token.
The group also seeks a narrower standard for knowing participation in unlawful issuance, distinguishing deliberate assistance from ordinary secondary-market trading. Its proposed distinction is a policy position, rather than a determination that any particular transaction is lawful.
Foreign-token checks reveal a practical disagreement
Treasury’s published proposal would allow a service provider to rely in certain circumstances on a foreign issuer’s representation that it can and will comply with lawful orders. That reliance would require reasonable due diligence and could not continue in the face of contrary information.
The proposal explicitly considers whether checking for a public trading prohibition is enough, and concludes that providers should consider other reasonably available evidence. Its rationale is that relevant information can exist before a regulator formally prohibits trading.
The industry response seeks more reliance on official prohibition lists, reflecting a different view of how much an intermediary can establish about an issuer with which it may have no direct relationship.
There is a similar operational issue around location. An interaction with a wallet address does not necessarily supply the information available when a conventional platform opens a customer account. Whether a provider should know more, and how that knowledge is assessed, affects how a rule works in permissionless systems.
This is a separate part of stablecoin regulation
The Treasury dispute concerns issuance, offers and sales. It is distinct from the Federal Reserve’s proposed framework for supervised stablecoin issuers, which addresses areas including reserves, capital and risk management.
For token holders, the proposals address different weaknesses. Adequate backing concerns an issuer’s ability to support redemption. Distribution rules concern who may place tokens into the market and what intermediaries must check before doing so.
The comment period’s close leaves those disagreements for Treasury to assess. The consequential next step is the final wording: which activities it covers, what evidence compliance requires and how clearly it separates infrastructure from financial services.