The trade group filed on the closing day of Treasury's comment period and asked it to confirm that liquidity pools, validators and self-custody software are not digital asset service providers. It also wants exchanges to rely on the Comptroller's public registry rather than investigate foreign stablecoin issuers themselves.
Treasury's comment period on the rule that will govern who may issue, offer and sell payment stablecoins in the United States closed on October 19, and the Blockchain Association used the closing day to file a 26-page letter arguing that the proposal sweeps in companies Congress did not intend to cover.
The proposed rule was published on August 18 at 91 Federal Register 53,368. It would add a new Part 1523 to Title 12 of the Code of Federal Regulations and implement Section 3 of the GENIUS Act, the section carrying the statutory prohibitions and limitations on payment stablecoin issuance, offer and sale. It runs 24 pages, sits on docket TREAS-DO-2026-0496 under regulatory identification number 1505-AC95, and specifies no effective or compliance date for the new part.
Most of the Association's letter turns on a single defined term. Section 2(7)(A) of the Act makes a person a digital asset service provider if, for compensation or profit, it engages in the business in the United States of exchanging digital assets for monetary value or for other digital assets, transferring them to a third party, acting as a custodian, or participating in financial services relating to digital asset issuance. The Association reads the phrase "engages in the business," together with the statute's reference to acting on behalf of customers or users, as limiting the term to firms that supply those activities as a service. On that reading a merchant accepting a stablecoin, a corporate treasury holding one, and a trading firm dealing for its own account all sit outside it.
Section 2(7)(B) then excludes a list of activities outright, among them self-custodial software interfaces, validating transactions or operating a distributed ledger, and participating in "a liquidity pool or other similar mechanism for the provisioning of liquidity for peer-to-peer transactions." The Association wants Treasury to write those exclusions into the final rule, to read them in a way that survives changes in technology, and to confirm that provider status does not attach to infrastructure merely because it lets users move their own assets. The argument runs parallel to the conditions the SEC set in April when it told DeFi front-ends they could operate without broker registration.
The letter's most practical objection concerns foreign issuers. Proposed sections 1523.3(b) and (c) would require a service provider offering a foreign issuer's stablecoin to obtain that issuer's representation that it can and will comply with lawful orders, and to conduct diligence that the proposal says should go beyond confirming registration and should "consider all reasonably available sources of information." The Association calls that standard unbounded, and says many firms cannot meet it at all: an exchange that lists a stablecoin ordinarily has no contract with the issuer and no means to compel a representation. In its place the letter proposes a two-part test, that the issuer appears on the Comptroller's list of approved registrations under Section 18 and that no prohibition or rescission is in force against it, together with a single public machine-readable list of permitted issuers, registered foreign issuers, comparable jurisdictions and effective prohibitions.
A further argument is about timing. Section 3(b)(1), the broad restriction on a service provider offering payment stablecoins that no permitted or registered issuer stands behind, does not apply until July 18, 2028. The Association warns that the proposal's treatment of knowing participation in an unlawful issuance could bring that date forward in practice, if routine listing, quoting or market making in a newly issued token counts as participation. It asks Treasury to require actual knowledge of the facts that make an issuance unlawful, and to let firms rely on an issuer's representations.
On geography the letter asks Treasury to drop the proposed test of whether a person reasonably believes a counterparty is in the United States and substitute actual knowledge plus information obtained in the ordinary course of a transaction, with no separate duty to identify counterparties where that information is not readily available, as on a decentralized venue.
The closing request is coordination. Part 1523 depends on rules that do not exist yet. Whether a firm is a permitted issuer turns on licensing rules the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration and the Federal Reserve Board have proposed but not adopted. The registry a service provider would lean on depends on an OCC registration rule and on a comparability framework Treasury has not yet proposed. Federal regulators already missed the rulemaking deadline the Act set in July. The Association asks that Part 1523 take effect no earlier than the last of the rules it depends on, so that compliance programs are not built against a moving target.
The public docket showed 77 posted submissions as of 07:08 UTC on October 20, the most recent dated October 15, among them the New York State Department of Financial Services and Representative Warren Davidson. Treasury posts filings some days after they arrive, so the Association's own letter had not appeared there at that point. Bank groups went further in June, when the FinCEN and OFAC compliance rule for stablecoin issuers closed for comment and they asked for that rulemaking to be paused outright. The Association's letter is signed by Ashok Pinto, its executive vice president for legal and government relations, and ends by asking to meet Treasury staff.
