The Blockchain Association filed a 26-page comment letter with the US Treasury on Monday, October 19, 2026. The group backs the goal of making payment stablecoins safe and well reserved, but wants narrower definitions covering service providers, criminal liability, foreign issuers and counterparty location tests.
🔑 Key takeaways
- The association asks the Treasury to narrow the definition of digital asset service providers (DASPs) and exclude self-custody software and validators.
- It wants knowing participation in an illegal issuance to require actual knowledge and substantial, coordinated assistance with the issuer.
- It proposes an explicit safe harbor for secondary market activity and reliance on public Treasury and OCC registries for foreign issuers.
- The comment period closed Monday with 123 submissions; the Act is scheduled to take effect on January 18, 2027.
Support in principle, reservations on substance
The letter follows a comment period that closed on Monday with 123 submissions logged on the federal regulations portal, according to The Block. The proposed rule, published in August 2026, implements Section 3 of the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), signed into law on July 18, 2025.
The statute creates a federal framework for issuers of payment stablecoins, dollar-pegged tokens used to move funds on blockchains. It is set to take effect on January 18, 2027, 120 days after final rules are promulgated.
The association explicitly endorses the Treasury’s central objective: ensuring that payment stablecoins are safe, trustworthy and issued by regulated firms holding adequate reserves. It argues, however, that several parts of the draft remain too vague to apply without risking divergent interpretations.
“We applaud the Treasury’s implementation efforts. Our letter asks for clearer lines so the final rule matches what Congress wrote.”
Blockchain Association, statement posted on X
Service providers: a definition that needs tightening
The first concern is the definition of “digital asset service providers” (DASPs), which determines which firms face certain stablecoin obligations. The association says Congress wrote the term for businesses that serve customers.
From that reading, the group concludes that foundational infrastructure should not be captured, notably self-custody software and validators. It also fears that firms trading their own assets, without serving clients, could be swept in by the same obligations.
Why the distinction matters
- Self-custody software lets users keep control of their keys without holding their funds.
- Validators secure the network with no contractual relationship to token holders.
- Market makers trade for their own account, which does not fit the notion of a service provided to clients.
Knowing participation and the secondary market
The second concern centers on the standard of “knowing participation” in an illegal stablecoin issuance. Section 3 bars unauthorized issuance in the United States and allows criminal penalties of up to $1 million per violation, up to five years in prison, or both.
The Blockchain Association argues that liability should require actual knowledge of the specific illegal issuance and substantial assistance coordinated with the issuer. Ordinary secondary market trading, in its view, should not count as participation.
“A market maker could have direct access to creation and redemption facilities without agreeing to distribute stablecoins for an issuer. That relationship, standing alone, should not create criminal exposure.”
Blockchain Association, comment letter
The group recommends an explicit “safe harbor” for independent secondary market activity, where no distribution obligation imposed by the issuer and no deliberate assistance exists. It specifically opposes treating a token’s age or the timing of a transaction relative to issuance as sufficient proof of knowing participation.
| Issue | Association request | Practical stake |
|---|---|---|
| DASP definition | Limit to firms serving customers | Exclude software and validators |
| Knowing participation | Actual knowledge and coordinated assistance | Protect secondary trading |
| Secondary market | Explicit safe harbor | Avoid automatic criminal exposure |
| Timeline | No general restrictions before July 2028 | Align with Congress’s deadline |
On timing, the association notes that different Section 3 restrictions become operative on different dates. It asks the Treasury not to use its reading of knowing participation to impose general distribution restrictions on providers before the July 2028 deadline set by Congress.
Foreign issuers and counterparty location
For stablecoins issued abroad, the draft says providers may offer certain foreign stablecoins to US customers only if conditions are met. These include obligations tied to legal orders and, for foreign issuers using the statutory route, supervisory arrangements and registration requirements.
The association notes that as of mid-October 2026, no comparison of foreign issuers had yet been published under the GENIUS Act. It argues that exchanges and custodians may lack the information to independently investigate each foreign issuer’s systems, and that some platforms have no contractual relationship with the companies whose tokens they list.
Rather than an open-ended reasonable diligence duty, it proposes letting providers rely on public registries maintained by the Treasury and the Office of the Comptroller of the Currency (OCC). That reliance would still yield to exceptions where an issuer is shown to be unable or unwilling to comply.
On location, the draft applies a “reason to believe” test in certain cases involving foreign issuers and providers. The Treasury cites customer information, geographic restrictions, device location checks and transaction monitoring. The association disputes this approach: these tools may be unavailable when a participant only interacts with a public address, and on-chain transactions do not reveal a wallet owner’s legal identity or residence.
The group recommends relying on actual knowledge and information reasonably obtained in the ordinary course of business. A provider with an existing customer relationship may already hold location data through account registration, unlike a smart contract interaction where neither party has a direct relationship with the other. It does not argue for shielding firms that deliberately target US users while ignoring available information.
Other requests and industry reaction
The association also asks the Treasury to drop a “functional equivalence” test it considers overly broad, to revisit its initial compliance cost estimates and to align effective dates with related rules required under the GENIUS Act.
Separately, the National Cryptocurrency Association has filed recommendations focused on consumer protection. They include a grace period allowing users to exchange, sell or convert existing stablecoins before restrictions affect their holdings, should an issuer’s legal status change. It also seeks safeguards to help victims recover stolen funds and to preserve self-custody and peer-to-peer transfers.
Conclusion: a final rule under scrutiny
The final text will show whether these clarification requests are adopted. Three scenarios stand out: broad acceptance, with an explicit safe harbor and a narrower DASP definition; a largely unchanged draft that invites legal challenges; or partial delays if the regulatory timetable slips relative to January 18, 2027 and July 2028.
For issuers and platforms alike, the priority is clear criteria on liability and location. Until official registries and foreign issuer comparisons are complete, exchanges will have to weigh caution against access to the US market.
Sources
- The Block, Blockchain Association clearer rules GENIUS Act (October 20, 2026)
- Crypto.news, GENIUS Act DeFi rules
- CryptoNews, Blockchain Association GENIUS Act
- Crypto Briefing, Blockchain Association Treasury stablecoin rule
- CryptoPanic, Blockchain Association GENIUS Act rollout
- Binance Square, post on the Treasury proposal
Cet article est publié à titre informatif et éducatif. Il ne constitue en aucun cas un conseil en investissement. Faites vos propres recherches (DYOR) avant toute décision.
