Blockchain Association Submits Comments On GENIUS Act Stablecoin ID Rules, Urges Primary-Market Focus
The Blockchain Association has submitted formal comments to U.S. federal agencies regarding proposed customer identification requirements for permitted payment stablecoin issuers under the GENIUS Act.
In an August 21 letter addressed to the Treasury’s Financial Crimes Enforcement Network, the Office of the Comptroller of the Currency, the Federal Reserve, the FDIC, and the National Credit Union Administration, the trade group expressed support for the rule’s goal of preventing illicit use of digital assets while pressing for critical clarifications to prevent regulatory overreach and preserve workable compliance.
The association strongly backs the agencies’ decision to confine customer identification obligations to primary-market activity, where issuers engage in direct contractual relationships with customers through issuance, redemption, reserve management, and custody. It maintains that extending these duties to downstream peer-to-peer transactions would exceed the GENIUS Act’s statutory limits, which specifically require verification of account holders that maintain a formal relationship with the issuer.
Because stablecoin issuers do not intermediate, facilitate, or approve secondary-market transfers, and because smart contracts execute automatically without revealing counterparty identities, the group argues that imposing identification requirements at that stage would be technically infeasible and risk imposing crippling global compliance burdens.
Clarifications on Definitions and Compliance Flexibility
Beyond the primary-market boundary, the Blockchain Association urges regulators to sharpen several key definitions to avoid unintended overlap with existing rules. It contends that one-off redemption requests from non-account holders should not establish a formal account, drawing a parallel to occasional money-order purchases in traditional banking.
Likewise, vendor and service-provider relationships, data-processing activities, and non-stablecoin business lines such as exchange or transfer services should not automatically trigger issuer-specific customer identification obligations if they are already governed by other Bank Secrecy Act frameworks. The group also emphasizes that when a customer redeems stablecoins indirectly through another regulated intermediary—such as a cryptocurrency exchange—the end user should not be deemed the issuer’s direct customer.
On operational matters, the association advocates for flexibility in how issuers collect and verify identifying information. It supports the use of modern, secure technologies, including customer-controlled digital wallets, secure application programming interfaces, verifiable credentials, and zero-knowledge proofs, so long as the issuer can form a reasonable belief that it knows the customer’s true identity.
The group notes that information may be received electronically and indirectly, such as through third-party sources or verifiable credentials, rather than requiring direct submission by the customer at every stage. It further recommends that issuers be permitted to rely on customer identification performed by other federally regulated financial institutions without bearing liability for those institutions’ compliance failures, provided the reliance is reasonable under the circumstances.
Finally, the Blockchain Association asks that the final rule’s effective date be aligned with the related anti-money laundering and sanctions compliance rulemaking under the GENIUS Act. Staggered implementation, it cautions, would force issuers to build compliance programs amid shifting requirements, generating duplicative costs without improving safeguards against illicit finance.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in crypto, AI, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in crypto, AI, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
