Blockchain Association Urges Treasury to Narrow Stablecoin Rule's Reach

The Blockchain Association is pressing Treasury to narrow the reach of its proposed GENIUS Act stablecoin rule, seeking clearer limits on which crypto businesses would face U.S. issuance and sales restrictions.

In comments filed Oct. 19, the industry group supported Treasury’s basic approach to implementing Section 3 of the law but asked it to define digital asset service providers more precisely. A firm trading for its own account should not fall under that definition solely because it buys or sells stablecoins, the group argued.

The association also wants the rule to make clear how the law’s exclusions apply to self-custody software, transaction validation and certain arrangements that supply liquidity for direct transactions between individuals. The distinction affects whether businesses involved in blockchain transactions face the obligations imposed on service providers that offer or sell payment stablecoins in the United States.

The group sought a clearer boundary around issuance as well. It supported tying issuance to an issuer’s first transfer of a stablecoin and asked Treasury to clarify that later trades between independent holders do not create a new issuance. That would distinguish an issuer’s initial distribution from trading after a coin enters the market.

For foreign-issued stablecoins, the association proposed letting service providers check an issuer’s approved registration and confirm that no effective trading prohibition, rescission or revocation applies. It said providers should be able to rely on those records unless they actually know material facts to the contrary. The group also asked Treasury to assess a recipient’s or counterparty’s U.S. location using information a business actually knows or reasonably obtains during a transaction, including when the person has no customer relationship with the business.

Treasury’s proposal remains open to revision. The association asked the department to coordinate its effective date with other GENIUS Act rules.

The law’s restriction on making foreign-issued payment stablecoins available in the United States is currently expected to take effect Jan. 18, 2027. It requires foreign issuers to have the technological ability to comply, and to comply, with lawful orders and reciprocal arrangements. A broader restriction begins July 18, 2028: Service providers generally cannot offer or sell payment stablecoins to people in the United States unless the coins come from permitted issuers or foreign issuers that qualify under Section 18.