Blockchain Association Challenges Treasury on GENIUS Act Compliance

In a 26-page submission filed following the October 19 consultation deadline, the industry group raised alarms over how the Treasury intends to classify digital asset service providers. The association contends that applying broad intermediary rules to permissionless protocols and proprietary traders—who manage their own assets rather than customer funds—would stifle innovation and impose impossible compliance burdens. A primary point of contention is the liability standard for 'unlawful issuance.' The group insists that Treasury must explicitly require actual knowledge and evidence of coordinated assistance before holding third parties, such as liquidity providers or exchanges, criminally responsible for an issuer’s regulatory violations.

Regarding foreign-issued stablecoins, the association warned that platforms lack the investigative reach to verify every issuer’s technical compliance with U.S. law. Instead of requiring platforms to perform exhaustive due diligence, the group suggested that firms be permitted to rely on official regulatory records maintained by the Treasury and the Office of the Comptroller of the Currency. Furthermore, the association pushed back against proposed geolocation requirements, noting that public blockchain transactions often lack the data necessary to verify the physical residence of wallet owners. The group maintains that service providers should only be held accountable for geographic restrictions when they possess actual knowledge of a U.S. counterparty or are engaged in purposeful solicitation.