Blockchain Association Submits Comments On GENIUS Act Stablecoin ID Rules, Urges Primary-Market Focus
The Blockchain Association has submitted formal feedback to U.S. federal companies concerning proposed buyer identification necessities for permitted cost stablecoin issuers beneath 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 commerce group expressed help for the rule’s purpose of stopping illicit use of digital property whereas urgent for vital clarifications to forestall regulatory overreach and protect workable compliance.
The affiliation strongly backs the companies’ choice to restrict buyer identification obligations to primary-market exercise, the place issuers interact in direct contractual relationships with prospects by way of issuance, redemption, reserve administration, and custody. It maintains that extending these duties to downstream peer-to-peer transactions would exceed the GENIUS Act’s statutory limits, which particularly require verification of account holders that preserve a proper relationship with the issuer.
Because stablecoin issuers don’t intermediate, facilitate, or approve secondary-market transfers, and since good contracts execute robotically with out revealing counterparty identities, the group argues that imposing identification necessities at that stage can be technically infeasible and threat imposing crippling international compliance burdens.
Clarifications on Definitions and Compliance Flexibility
Beyond the primary-market boundary, the Blockchain Association urges regulators to sharpen a number of key definitions to keep away from unintended overlap with current guidelines. It contends that one-off redemption requests from non-account holders mustn’t set up a proper account, drawing a parallel to occasional money-order purchases in conventional banking.
Likewise, vendor and service-provider relationships, data-processing actions, and non-stablecoin enterprise strains akin to alternate or switch providers mustn’t robotically set off issuer-specific buyer identification obligations if they’re already ruled by different Bank Secrecy Act frameworks. The group additionally emphasizes that when a buyer redeems stablecoins not directly by way of one other regulated middleman—akin to a cryptocurrency alternate—the tip person shouldn’t be deemed the issuer’s direct buyer.
On operational issues, the affiliation advocates for flexibility in how issuers acquire and confirm figuring out info. It helps using fashionable, safe applied sciences, together with customer-controlled digital wallets, safe utility programming interfaces, verifiable credentials, and zero-knowledge proofs, as long as the issuer can kind an affordable perception that it is aware of the shopper’s true identification.
The group notes that info could also be acquired electronically and not directly, akin to by way of third-party sources or verifiable credentials, quite than requiring direct submission by the shopper at each stage. It additional recommends that issuers be permitted to depend on buyer identification carried out by different federally regulated monetary establishments with out bearing legal responsibility for these establishments’ compliance failures, supplied the reliance is cheap beneath the circumstances.
Finally, the Blockchain Association asks that the ultimate rule’s efficient date be aligned with the associated anti-money laundering and sanctions compliance rulemaking beneath the GENIUS Act. Staggered implementation, it cautions, would pressure issuers to construct compliance packages amid shifting necessities, producing duplicative prices with out bettering safeguards in opposition to illicit finance.
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