Blockchain Association has asked the U.S. Treasury Department to draw sharper boundaries around who falls under its proposed stablecoin rules, arguing that unclear definitions could pull decentralized-finance infrastructure and ordinary secondary-market activity into obligations Congress did not intend. The industry group filed a 26-page comment on October 19 responding to Treasury's proposal for implementing Section 3 of the GENIUS Act. It supports the proposal's central goal of ensuring payment stablecoins are issued by regulated companies with adequate reserves, while requesting revisions before the rule is finalized.

Where the DASP boundary sits

A central issue is the definition of a digital asset service provider, or DASP. The Association said the term should apply to businesses providing specified services for customers, not every market participant that trades or transfers digital assets. It asked Treasury to state expressly that proprietary trading does not create DASP status on its own. The letter also says statutory exclusions should be written directly into the regulation, including exclusions covering self-custody software, transaction validation, distributed-ledger operation and certain peer-to-peer liquidity mechanisms.

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The filing argues that those exclusions should work in a technology-neutral way as decentralized markets evolve. A liquidity mechanism should not lose its exclusion merely because it uses an order book, oracle-informed pricing or another design that differs from a conventional automated market maker, according to the group. That distinction matters because infrastructure operators may not know the identity or location of users interacting through permissionless systems and therefore may be unable to perform duties designed for customer-facing intermediaries.

Secondary trading and criminal exposure

Blockchain Association also asked Treasury to preserve the proposal's first-transfer concept of issuance while confirming that later transfers by independent holders are secondary-market activity. For the GENIUS Act's criminal provision on knowingly participating in an unlawful issuance, the group wants an actual-knowledge standard and a requirement for substantial assistance coordinated with the issuer. It said routine market making, distribution or trading should not count as participation by itself. The filing also cautions against applying that provision in a way that effectively brings forward the July 18, 2028 compliance date Congress set for DASP offer-and-sale restrictions.

Foreign issuers and location checks

The letter challenges open-ended due diligence for foreign payment stablecoin issuers when a service provider has no direct relationship with the issuer. Instead, it proposes that DASPs be allowed to rely on public lists maintained by regulators, including lists of approved registrations and prohibitions, unless they know material facts pointing the other way. Treasury's proposal addresses foreign-issued tokens because the GENIUS Act restricts when service providers may make them available in the United States and requires qualifying issuers to be capable of complying with lawful orders.

The Association also wants Treasury to replace a proposed reasonable-belief test for whether a person is located in the United States with a standard based on actual knowledge and information obtained in the ordinary course of a transaction. It argues that participants in permissionless networks may see only a wallet address. The requested change would not settle the policy debate; it would narrow when businesses must seek additional location information. Treasury opened the proposal in August, and the rulemaking now moves into agency review after the comment deadline. The final scope will determine how licensing, market access and enforcement apply across issuers, intermediaries and decentralized infrastructure.

Sources

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