TheBlock
The Blockchain Association has asked the U.S. Treasury to sharpen its proposed rules for Section 3 of the GENIUS Act, which governs who can issue, offer, and sell payment stablecoins in the United States. In a 26-page letter, the industry group backed Treasury's core approach but sought clearer definitions for digital asset service providers, knowing participation, and foreign issuer obligations. The public comment period closed Monday with 123 submissions, and the law is expected to take effect in January 2027.
Why it matters
The association said the rules should target companies serving customers without sweeping in core infrastructure such as self-custody software and validators. It also argued that firms trading their own assets should not automatically qualify as regulated digital asset service providers.
The letter urged Treasury to set a higher bar for criminal liability tied to knowing participation in unlawful stablecoin issuance. The group said liability should require actual knowledge and substantial assistance coordinated with an issuer, while ordinary secondary-market trading should not count as participation.
Market impact
The foreign issuer provisions could shape how U.S. platforms list and support payment stablecoins issued outside the country. The association opposed open-ended due diligence duties for platforms that may have no direct relationship with foreign issuers, recommending reliance on regulators' public prohibition lists instead.
It also asked Treasury to replace the proposed reasonably believes standard for determining whether a counterparty is in the United States with an actual-knowledge standard based on information gathered in the ordinary course. The final language will set the compliance boundary for stablecoin issuers, platforms, and permissionless networks ahead of the 2027 implementation date.
Frequently asked questions
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What parts of the GENIUS Act rules does the Blockchain Association want clarified?
The group wants clearer definitions for digital asset service providers, knowing participation in unlawful issuance, and requirements affecting foreign stablecoin issuers.
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How could the proposed rules affect DeFi infrastructure?
The association said customer-facing businesses should be covered, while core infrastructure such as self-custody software and validators should be excluded.
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What liability standard did the association propose for unlawful stablecoin issuance?
It said liability should require actual knowledge and substantial assistance coordinated with the issuer. Ordinary secondary-market trading should not qualify as participation.
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What changes were requested for foreign-issued stablecoins?
The group opposed open-ended due diligence when platforms lack a direct relationship with foreign issuers. It recommended relying on regulators' public prohibition lists.
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When is the GENIUS Act expected to take effect?
The stablecoin legislation is expected to take effect in January 2027. Treasury's final rules will establish the compliance boundaries before implementation.
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