The Blockchain Association has called on the US Treasury Department to provide clearer guidance on decentralised finance, foreign issuers and liability under proposed rules for payment stablecoins.
The industry body made the request in a 26-page letter filed on Monday, while broadly supporting Treasury’s approach to implementing Section 3 of the GENIUS Act. That section sets out who may issue, offer and sell payment stablecoins in the United States.
The association said the final regulations should give greater clarity on the definition of digital asset service providers (DASPs), the meaning of “knowing participation” in unlawful activity and the obligations facing issuers based outside the US.
Treasury had invited public responses to its proposed GENIUS Act regulations, with the consultation closing on Monday. The legislation, described as landmark stablecoin legislation, was signed into law last year and is expected to take effect in January 2027. The federal regulations portal recorded 123 submissions.
The Blockchain Association said it supported Treasury’s wider aim of ensuring payment stablecoins are secure, reliable and issued by regulated companies holding sufficient reserves.
Calls for clearer definitions
The association said its recommendations were intended to ensure the final rules remained consistent with the legislation passed by Congress.
“We applaud Treasury’s implementation efforts. Our letter seeks clearer lines so the final rule matches what Congress wrote,” it said in a thread of posts on X.
It asked Treasury to define more precisely which businesses fall within the category of DASPs, because that classification determines which stablecoin requirements apply.
“Congress wrote that definition for businesses serving customers, and excluded core infrastructure like self-custody software and validators. Firms trading their own assets shouldn’t be swept in,” the association said.
The group also challenged the proposed treatment of “knowing participation” in unlawful stablecoin issuance. Such involvement could result in criminal penalties, and the association said liability should be limited to cases involving genuine knowledge and significant assistance.
“Liability should require actual knowledge and substantial assistance in coordination with the issuer,” it said. Ordinary trading on the secondary market should not, in its view, be considered participation.
Rules for foreign-issued stablecoins
The letter also sought changes to the proposed due diligence requirements for foreign payment stablecoins.
The association said DASPs should not be expected to carry out “open-ended due diligence” on overseas issuers before offering their stablecoins, noting that many DASPs have no direct relationship with those companies.
It instead recommended allowing DASPs to meet their obligations by using publicly available lists of entities prohibited by regulators.
The group also urged Treasury to replace the proposed “reasonably believes” test for deciding whether a counterparty is located in the US. It said the standard should be based on actual knowledge and information obtained through ordinary business activity.
In permissionless systems, participants may “interact only with a wallet address” and receive no additional information, the association said. That could make further identification and efforts to establish a user’s location difficult to carry out.
