Key Points
- A 26-page submission from the Blockchain Association reached the U.S. Treasury on October 19, 2026, challenging proposed GENIUS Act stablecoin regulations.
- The industry organization seeks to exclude validators, self-custody software providers, and entities trading proprietary assets from Digital Asset Service Provider classification.
- Treasury faces pressure to restrict liability to situations involving actual knowledge and significant assistance to issuers.
- The association recommends allowing companies to reference regulators’ public prohibition lists rather than conducting broad due diligence on foreign issuers.
- With 123 total submissions received before the deadline, the regulatory framework is scheduled for full implementation on January 18, 2027.
The U.S. Treasury Department is facing detailed criticism from the Blockchain Association over its stablecoin regulatory framework under the GENIUS Act. The industry advocacy organization submitted extensive feedback on October 19, 2026.
Their detailed submission addresses Treasury’s proposed regulations governing payment stablecoin issuance, offering, and sale. Full implementation remains on track for January 18, 2027.
The organization emphasized its desire to see final regulations that reflect “what Congress wrote.” While expressing support for Treasury’s objective of ensuring safe, reserve-backed stablecoins from regulated entities, the group outlined several critical modifications.
Core Issues Raised by Industry Advocates
The submission centered on three primary areas of concern. First on the list: how regulations define Digital Asset Service Providers, or DASPs.
According to the association, congressional intent limited DASPs to businesses serving customers. Companies handling only their own assets shouldn’t qualify for this designation, they argued.
The submission further contended that fundamental infrastructure—including validators and self-custody software—deserves exclusion. An expansive interpretation would impose compliance obligations on entities Congress never meant to regulate, the group cautioned.
Second, the proposed “knowing participation” standard drew sharp criticism. Under current language, the association warned, routine secondary-market trading or market-making activities could trigger criminal liability.
The organization urged Treasury to confine liability to scenarios involving “actual knowledge and substantial assistance in coordination with the issuer.” Industry participants have expressed concern that ambiguous liability provisions might chill market-making activity as the January 2027 implementation approaches.
Third, regulations affecting foreign stablecoin issuers came under scrutiny. The association rejected broad due diligence requirements, highlighting that many DASPs maintain no direct connections with these issuers.
As an alternative, the group suggested allowing companies to consult regulators’ public prohibition lists. This approach would employ an actual-knowledge standard instead of the more expansive “reasonably believes” threshold.
Additional requests included rejecting a flexible “functional equivalent” test for monetary value. The association also called for synchronizing the rule’s effective date with related GENIUS Act regulations from other agencies.
Market Context and Multi-Agency Coordination
The stablecoin sector currently represents approximately $302 billion in total value. Tether’s USDT commands roughly $183 billion of that figure, with USDC accounting for approximately $73 billion.
Both assets enjoy widespread trading across global secondary markets. Within these markets, DASPs frequently encounter only wallet addresses, lacking comprehensive issuer information.
Regulatory efforts now extend across multiple federal agencies. The Federal Reserve has published two separate proposals targeting stablecoin issuers, addressing reserves, capital requirements, and custody protocols.
Regulators have already extended the statutory GENIUS Act timeline. International coordination includes briefings provided to the United Kingdom regarding implementation strategies.
Broader industry engagement has accompanied the legislation. Previously, 125 cryptocurrency companies mounted a defense of stablecoin rewards against objections from traditional banking institutions.
In separate developments, a company connected to Bo Hines obtained $6.3 million from Tether during his involvement in shaping the legislation, sparking controversy. The Trump administration has also explored strategies for promoting dollar-backed stablecoins in international markets.
The public feedback window concluded on October 19 with 123 submissions received. Treasury now enters its review phase before publishing final regulations.
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