The Blockchain Association has submitted formal comments to U.S. federal agencies on proposed customer identification requirements for permitted payment stablecoin issuers under the GENIUS Act, as regulators begin translating the law’s stablecoin framework into compliance rules that could shape how issuers operate in primary markets.

In an August 21 letter 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 said it supports the rule’s goal of preventing illicit use of digital assets while seeking clarifications it says are necessary to avoid regulatory overreach and preserve workable compliance.

The association said it strongly supports the agencies’ decision to limit customer identification obligations to primary-market activity, where issuers have direct contractual relationships with customers through issuance, redemption, reserve management, and custody. It argued that extending those duties to downstream peer-to-peer transactions would go beyond the GENIUS Act’s statutory limits, which 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 said applying identification requirements at that stage would be technically infeasible and could create substantial global compliance burdens.

On Friday, Blockchain Association posted on X that it had filed comments on the proposed customer identification requirements for permitted payment stablecoin issuers under the GENIUS Act. In the post, the group said it supports the goal of preventing illicit use of digital assets and supports the proposal’s core framework.

1/ On Friday, Blockchain Association filed comments on federal agencies’ proposed customer identification requirements for permitted payment stablecoin issuers under the GENIUS Act. We support the goal of preventing illicit use of digital assets, and support the proposal’s core… pic.twitter.com/ED0CifzEqE — Blockchain Association (@BlockchainAssn) August 24, 2026

1/ On Friday, Blockchain Association filed comments on federal agencies’ proposed customer identification requirements for permitted payment stablecoin issuers under the GENIUS Act. We support the goal of preventing illicit use of digital assets, and support the proposal’s core… pic.twitter.com/ED0CifzEqE

Clarifications on definitions and compliance flexibility

Beyond the primary-market boundary, the Blockchain Association urged regulators to clarify several definitions to prevent overlap with existing rules. It said one-off redemption requests from non-account holders should not be treated as establishing a formal account, comparing them to occasional money-order purchases in traditional banking.

The group also said 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 those activities are already covered by other Bank Secrecy Act frameworks. It further said that when a customer redeems stablecoins indirectly through another regulated intermediary, such as a cryptocurrency exchange, the end user should not be considered the issuer’s direct customer.

On operational issues, the association called for flexibility in how issuers collect and verify identifying information. It supported the use of 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 said information may be received electronically and indirectly, including through third-party sources or verifiable credentials, rather than requiring direct submission by the customer at every stage. It also recommended that issuers be allowed 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 asked that the final rule’s effective date be aligned with the related anti-money laundering and sanctions compliance rulemaking under the GENIUS Act. It warned that staggered implementation would force issuers to build compliance programs under changing requirements, adding duplicate costs without improving safeguards against illicit finance.