The Blockchain Association submitted a 26-page comment letter to the U.S. Treasury on October 19, 2026, seeking refinements to the agency’s proposed rule governing payment stablecoin issuance. The group supports the core framework for regulating who may issue, offer, or sell stablecoins in the United States while advocating for clearer boundaries that avoid unnecessary obligations on decentralized protocols and ordinary market participants.

Focus on DeFi Infrastructure and Service Provider Definitions

Treasury’s proposal implements Section 3 of the GENIUS Act, which establishes requirements for stablecoin issuers and service providers. The association argued that the definition of digital asset service providers should remain narrow and aligned with the statute. It questioned whether activities such as developing or operating underlying blockchain protocols, self-custody software, or participation in validation and liquidity provision should automatically trigger service provider obligations.

The group emphasized that proprietary traders and firms managing their own inventory for stablecoins occupy a different role from intermediaries serving retail or institutional customers. It called for explicit language confirming that operating infrastructure for permissionless systems does not place developers or operators within the service provider category. Treasury’s earlier proposal already referenced statutory exclusions for self-custody wallets and certain peer-to-peer transfers, yet the association wanted these distinctions stated more directly to avoid ambiguity for blockchain participants.

Limits on Liability for Knowingly Participating in Unlawful Issuance

The letter also addressed criminal and civil exposure under Section 3. The association sought explicit clarification that liability for knowing participation requires actual knowledge of the facts rendering the issuance unlawful plus affirmative, substantial assistance coordinated with the issuer. It proposed a safe harbor for independent secondary-market activity, noting that buying or selling stablecoins on an exchange for one’s own account, providing liquidity, or transacting through market-making facilities should not constitute participation in original issuance.

The group opposed tying liability solely to timing or proximity of transactions relative to issuance. It stressed that later trades between independent holders represent ordinary market activity rather than coordinated distribution. The association recommended that Treasury align the rule’s timing with Congress’s July 2028 deadline for broader distribution restrictions to prevent premature application of service provider obligations.

Treatment of Foreign-Issued Stablecoins and Counterparty Location

Foreign-issued payment stablecoins received particular attention. The association advocated allowing service providers to rely on publicly maintained records from Treasury and the Office of the Comptroller of the Currency when determining compliance. It proposed that platforms could assess whether an issuer meets statutory conditions, including oversight arrangements and absence of effective trading prohibitions, using official lists unless they possess actual contrary knowledge.

The group further requested that assessment of a counterparty’s U.S. location incorporate information a business actually knows or reasonably obtains during a transaction. It highlighted permissionless protocols where blockchain technology may prevent reliable determination of location, arguing against imposing new wallet identification obligations in such cases. This approach would enable exchanges and custodians to operate without exhaustive independent investigations of every foreign issuer.

Treasury Proposal and Public Comment Process

Treasury sought feedback on its rule through October 19, 2026, with the consultation period now concluded. The proposed rule remains subject to further review before adoption, expected to take effect in January 2027 for initial provisions and later for others. The Blockchain Association noted its filing aligns with the law’s statutory language while incorporating safeguards for stablecoin holders. No other major stakeholders’ positions were detailed in the submissions, but the group urged coordination of the rule’s effective date with parallel GENIUS Act regulations.

The submission underscores the industry’s interest in balanced implementation that supports innovation while maintaining consumer protections under the GENIUS Act framework. Treasury has not yet issued a final rule following the public comment window.