Blockchain Association Calls for Balanced GENIUS Act Implementation

The Blockchain Association urged the U.S. Department of the Treasury to implement rules under the GENIUS Act that preserve payment efficiency, financial inclusion, and innovation.

In its comment letter responding to the Treasury’s Advance Notice of Proposed Rulemaking, the Blockchain Association emphasized the importance of crafting rules that balance effective oversight with continued technological progress and market competition.

As Treasury assumes its central role in implementing the Act, the Blockchain Association offered six recommendations:

1. Limit the Act’s Scope to "Payment Stablecoins." The Blockchain Association urged Treasury to clarify that the Act regulates only "Payment Stablecoins," as narrowly defined in the statute. The association emphasized that other types of stable-value tokens—such as algorithmic or synthetic tokens—should fall outside this framework and be addressed through separate guidance.
2. Narrowly Interpret the Prohibition on Yield. The Blockchain Association argued that the Act’s prohibition on paying interest or yield should be strictly limited. The association contended that the restriction should apply only to stablecoin issuers and only for activities related to the "holding, use, or retention" of the asset—not to third-party platforms such as DeFi protocols or other activities like delegation.
3. Cabin the Definition of "Digital Asset Service Providers." The Blockchain Association recommended a narrow interpretation of "Digital Asset Service Provider" to apply only to the entities explicitly described in Section 2(7)(A) of the Act. The association further noted that Treasury should respect the exclusions Congress provided for entities such as protocol developers and liquidity providers.
4. Facilitate State Regulatory Pathways. The Blockchain Association supported the Act’s dual federal–state regulatory structure, which allows smaller issuers to operate under state oversight. The association explained that this approach could foster competition, administrative efficiency, and innovation while easing the burden on federal regulators.
5. Provide Fair Tax Treatment. The Blockchain Association argued that Payment Stablecoins should be exempt from certain information-reporting requirements. The association maintained that, because these assets are designed to maintain a stable value, they generate minimal taxable gains or losses, making current reporting rules impractical and overly burdensome for everyday transactions.
6. Encourage New Entrants and Innovation. The Blockchain Association advocated for policies that avoid creating barriers to entry and promote innovation. The association recommended proportional compliance obligations, the establishment of regulatory sandboxes or pilot programs for testing new products, and a streamlined, transparent licensing process for new issuers.