# Blockchain Association Challenges Treasury on GENIUS Act DeFi Rules Industry group seeks clearer liability definitions for software providers and stablecoin participants. - **Source:** [NewsBTC](https://brifing.si/source/1757e8d5-352f-4479-994f-79c6e6161b17) - **Published:** 2026-10-20 - **Topic:** [Finance](https://brifing.si/c/finance) - **Original article:** - **On Brifing:** https://brifing.si/s/33d472ae-8e19-4947-8bf1-f56484ae2677 ## Regulatory Scope Concerns The Blockchain Association has formally requested that the US Treasury clarify the scope of the GENIUS Act. Their primary concern involves ensuring that software developers and infrastructure providers are not unfairly categorized as regulated payment issuers. The group argues that existing frameworks must distinguish between financial businesses and neutral technology. ## Defining Service Providers A central point of contention is the definition of a digital asset service provider. The association advocates for a clear distinction between customer-facing financial entities and non-custodial software or network validators. They believe that infrastructure providers lack the service capabilities that justify the stringent regulatory burdens currently proposed under Section 3. ## Liability for Unlawful Issuance The industry group disputes how the proposed rules define knowing participation in unlawful stablecoin issuance. They argue that enforcement actions should require proof of genuine knowledge and meaningful assistance. The association warns against interpreting standard secondary-market activities as evidence of involvement, which could inadvertently penalize legitimate participants in the ecosystem. ## Foreign Stablecoin Compliance Foreign-issued stablecoins present significant challenges for domestic service providers under the current proposal. The association suggests that compliance requirements should rely on accessible regulatory information. They argue that it is unreasonable to assume service providers can conduct deep investigations into issuers with whom they maintain no direct business relationship. ## Implementation Shift The regulatory battle over stablecoins is transitioning from legislative debates in Congress to the technical details of implementation. As the Treasury reviews comments on the GENIUS Act, the focus remains on how Section 3 rules will be applied. This shift highlights the growing importance of administrative rule-making for the crypto industry. ## Balancing Enforcement and Innovation Regulators face the difficult task of balancing the industry's demand for workable rules against their mandate to prevent financial crime. The Treasury must decide how to police payment products without stifling the broader digital asset ecosystem. This tension defines the current dialogue between government officials and the blockchain advocacy sector. ## Future Compliance Impact The final language of the GENIUS Act will determine the operational reality for many market participants. If the rules remain broad, compliance could become a significant burden for the entire ecosystem. Conversely, narrower definitions would protect infrastructure providers from excessive oversight, potentially shaping the future of decentralized finance development in America. ## Advocacy Versus Adoption The positions presented by the Blockchain Association are currently advocacy efforts rather than adopted policy changes. The Treasury has not yet finalized the language or incorporated these specific requests into the GENIUS Act. Stakeholders are now waiting to see how these arguments influence the final regulatory framework for digital assets. ## Sources covering this story - https://www.newsbtc.com/crypto-regulation/crypto-industry-group-asks-treasury-to-clarify-genius-act-rules-for-defi/ — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._