Lobby group backs GENIUS Act's KYC scope

The Blockchain Association told Treasury it supports the agency's draft rules for implementing the GENIUS Act, the stablecoin law signed earlier this year. The lobby group's comment letter asks regulators to confine customer identification requirements to the moment an issuer directly sells a stablecoin to a buyer, not every hop the token takes afterward.

What the letter asks for

The GENIUS Act requires stablecoin issuers to verify customer identities, but the statute left room for interpretation on where that obligation starts and stops. Treasury's proposed rule already leans toward a narrower primary-market reading. The Blockchain Association wants that narrowing locked in and sharpened with clearer definitions of terms like "issuer" and "customer."

• The comment letter asks Treasury to limit KYC checks to direct issuer-to-customer transactions in the primary market.
• GENIUS Act passed and was signed into law earlier in 2025, per The Block's reporting.
• The Blockchain Association represents a broad swath of the crypto industry, including major exchanges and issuers, in Washington lobbying.
• The letter specifically flags ambiguity around who counts as a "customer" once tokens move through secondary trading venues.

Why the scope fight matters

The default read on this is process: an industry group filing a routine comment letter on a rule most people already expect to pass. That framing misses where the money and the compliance burden actually sit.

If KYC obligations extend past the primary issuance point, every wallet, exchange and market maker touching a stablecoin downstream could inherit identity-verification duties they never signed up for. That would turn a narrow issuer-level rule into a network-wide compliance mandate.

Confining KYC to the issuer's own point of sale keeps the burden where issuers like Circle and Tether already operate: onboarding a buyer who mints or redeems directly with them. It leaves exchanges, DeFi protocols and secondary-market participants outside the identity-check perimeter for stablecoin transfers they merely facilitate.

That is a meaningful line for market structure, not a technicality. A stablecoin that only needs KYC at mint keeps the free-floating liquidity that makes it usable as a settlement token. One that requires KYC at every transfer point starts to look more like a bank account than a bearer instrument.

The Blockchain Association's push for clearer definitions of "issuer" and "customer" also signals where the real fight sits. Vague terms give regulators discretion to expand scope later through guidance rather than rulemaking, and industry wants that discretion closed off now, while the rule is still being drafted.

Most coverage will treat this letter as support for GENIUS Act implementation. The substance of the ask is narrower: keep compliance costs at the issuance layer and off the secondary market, which is where stablecoin volume and revenue for exchanges and market makers actually live.

What determines the outcome

Treasury's final rule, not this letter, decides whether that boundary holds. The comment period is where industry stakes its position before the agency writes binding text.

• Watch whether Treasury's final rule retains the primary-market limitation on KYC checks or expands scope to secondary transfers.
• Watch how Treasury defines "customer" and "issuer" in the final text, since vague definitions leave room for later expansion via guidance.
• Watch whether exchanges and market makers file their own comments diverging from the Blockchain Association's primary-market framing.