The Blockchain Association wants the U.S. Department of the Treasury to narrow its payment stablecoin proposal, warning that independent traders and decentralized finance infrastructure could face burdensome compliance duties.
In a 26-page letter dated Oct. 19, the industry group calls for a public registry that firms could consult when handling stablecoins issued outside the United States. It wants the registry to show issuer registrations, trading prohibitions and any rescissions or revocations.
Treasury’s draft would require reasonable due diligence before a digital asset service provider relies on a foreign issuer’s assurance that it can and will comply with lawful orders and reciprocal arrangements. The association says providers without direct contact with an issuer should be able to use public records unless they actually know the issuer lacks the ability to comply, or will not comply, with an order or arrangement. It argues that broader checks would increase costs and could shift liquidity away from U.S. venues.
The letter also asks Treasury to clarify who qualifies as a digital asset service provider. The association says a firm should not fall into that category solely because it trades its own assets. It wants the final rule to reflect the law’s exclusions for self-custody software, transaction validation and certain peer-to-peer liquidity arrangements. The group backs Treasury’s broader goal of regulated stablecoin issuance supported by adequate reserves.
The draft identifies market making and distribution of newly issued stablecoins as possible participation in an unlawful issuance. The association wants liability limited to people who know the facts making an issuance unlawful and substantially assist the issuer in coordination with it. Under the GENIUS Act, knowing participation can bring a fine of up to $1 million per violation, a prison term of up to five years, or both.
The association also says a blockchain wallet address alone may not establish where its holder is located. It wants location checks based on information a firm knows or routinely obtains during a transaction, without a new identification program solely for this rule.
Treasury set Oct. 19 as the comment deadline and has not announced when it will issue a final rule. It expects the GENIUS Act to take effect Jan. 18, 2027. Starting July 18, 2028, digital asset service providers face a separate restriction on offering or selling payment stablecoins to people in the United States unless the issuer is permitted or meets the specified foreign-issuer exception.
