TLDR
- The Blockchain Association urged five U.S. agencies to keep stablecoin customer identification rules limited to direct issuer-customer relationships.
- The group said peer-to-peer and secondary-market stablecoin transfers should remain outside issuer identification requirements.
- It asked regulators to clarify the definitions of “account,” “customer,” and “digital asset service provider” under the GENIUS Act rules.
- The association wants one-time redemptions, vendor relationships, and certain exchange activities excluded from duplicate customer checks.
- It supported flexible identity verification methods, including zero-knowledge proofs and trusted third-party data sources.
The Blockchain Association Inflows debate has entered the GENIUS Act rulemaking process as the trade group urged five U.S. agencies to keep stablecoin customer checks limited to direct issuer relationships. In a 15-page comment letter, the group said wider checks on secondary-market transfers would go beyond the law.
Blockchain Association Inflows Focus on Primary-Market Rules
The proposed rule from FinCEN, the OCC, Federal Reserve, FDIC, and NCUA would require permitted stablecoin issuers to run customer identification programs. The rule applies when an issuer directly handles issuance, redemption, conversion, or custody for a customer.
The Blockchain Association supports that structure. It said peer-to-peer transfers should remain outside issuer duties because issuers often do not know who sends or receives stablecoins. Validators confirm such transfers without requiring issuer approval before settlement.
Group Seeks Clearer Account Definitions
The association also asked agencies to narrow the meaning of an account. It wants one-time redemptions by non-account holders and vendor relationships excluded. The group said services such as analytics, market data, and blockchain infrastructure should not create customer accounts.
It also warned against duplicate checks where one company both issues stablecoins and runs an exchange. Exchange customers already face Bank Secrecy Act controls. The group asked agencies to confirm that customers do not become issuer account holders only because they use trading services.
Digital Identity and Compliance Timing
The letter supported flexible identity checks and said issuers should be free to use tools such as zero-knowledge proofs. These methods can confirm that a customer meets identity rules without sending full personal data directly to the stablecoin issuer.
The Blockchain Association also asked agencies to allow taxpayer identification numbers from trusted third-party sources. It cited an earlier Federal Reserve and FinCEN exemption that gave banks similar flexibility when collecting customer information.
The group also wants the final rule to clarify redemptions submitted through exchanges. It said the exchange should count as the direct party even when customer details pass to the issuer during the process.
On timing, the association asked agencies to align the customer identification rule with separate anti-money laundering and sanctions rules. It said both rule sets rely on linked definitions and should start together to reduce conflicting compliance duties.
Comments on the proposal closed August 21, while the final compliance date remains tied to future rulemaking.
