TL;DR: The Blockchain Association has asked the US Treasury to clarify rules for DeFi software, foreign stablecoin issuers, and who could be held liable under the proposed GENIUS Act. The debate over US stablecoin regulation is moving from Congress to the details of implementation. In comments on Treasury’s proposed Section 3 rules under the GENIUS Act, the Blockchain Association argued that a framework designed for regulated payment issuers should not unintentionally capture unrelated software and market participants. One sticking point is the definition of a digital asset service provider. The association wants officials to distinguish customer-facing financial businesses from infrastructure such as self-custody software and validators that do not provide the same services. It also disputes how the rules might define knowing participation in unlawful stablecoin issuance. Its position is that enforcement should require genuine knowledge and meaningful assistance, rather than treating ordinary secondary-market activity as evidence of involvement. Foreign-issued stablecoins are another concern. The group says compliance requirements should rely on accessible regulatory information rather than assuming every service provider can investigate an issuer with which it has no direct relationship. These are advocacy positions, not changes Treasury has adopted. Regulators still have to balance the industry’s request for workable rules against their responsibility to police payment products and financial crime. The eventual language will help determine whether GENIUS Act compliance is mostly a challenge for stablecoin issuers or one that reaches much further into the surrounding ecosystem. Written by the News Desk and edited by Samuel Rae.
Frequently Asked Questions
FAQs Crypto Industry Group Asks Treasury to Clarify GENIUS Act Rules for DeFi
1 What is the GENIUS Act
Its a US law that sets rules for stablecoinscrypto tokens pegged to the dollar It covers who can issue them how they must be backed and how theyre supervised
2 What does DeFi mean
DeFi stands for decentralized financefinancial services like lending trading and earning interest that run on blockchain software instead of banks or brokers
3 Why is a crypto industry group asking the Treasury for clarity
Because the GENIUS Act was written mainly with traditional stablecoin issuers in mind The group wants Treasury to spell out how the rules apply to DeFi platforms so companies know whats allowed before they build or launch products
4 What exactly is the group asking Treasury to clarify
Mostly who counts as a stablecoin issuer when software not a company issues or manages the tokenand how DeFi protocols should handle compliance custody and reserves under the law
5 Why does this matter to everyday crypto users
Clear rules mean safer stablecoins fewer sudden shutdowns or restrictions and more confidence that the DeFi apps you use are operating legally
6 Does the GENIUS Act ban DeFi
No It regulates stablecoin issuance The open question is how its requirements apply to DeFi setups which is exactly what the industry wants Treasury to address
7 What is a stablecoin in simple terms
A crypto token designed to stay at a fixed valueusually 1by holding reserves like cash or shortterm government bonds
8 Who does the GENIUS Act currently cover
Primarily permitted payment stablecoin issuersregulated entities that issue dollarpegged tokensalong with the reserves they must hold and the disclosures they must make
9 Whats the main problem with applying it to DeFi
DeFi often has no single company in charge Rules built around identifiable issuers are hard to apply when a smart contract does the work which creates legal uncertainty
10 What is a smart contract
Selfexecuting code on a blockchain that automatically carries out agreementslike releasing funds or processing a tradewithout a middleman