Ripple chief legal officer Stuart Alderoty has urged the U.S. Treasury to protect stablecoin holders as regulators draft the rules implementing the GENIUS Act. The National Cryptocurrency Association (NCA), an industry organization led by Alderoty, filed formal comments with Treasury on October 19 addressing Section 3 of the stablecoin law.

The GENIUS Act established the framework. Now, Treasury's rules must ensure that Americans are not stranded holding stablecoins if regulations change, have pathways to recover stolen funds, and can self-custody if they choose.

— Stuart Alderoty (@s_alderoty) October 19, 2026

The statute set the overall framework for payment stablecoins, and Treasury's forthcoming rules will determine how its provisions take effect. In its submission, the NCA backed the requirement that payment stablecoins hold full reserves, but pressed for clearer treatment of existing holdings, stolen funds, and personal wallets. The comments were filed on the day Treasury's consultation closed, and the regulator has not yet finalized the Section 3 rules. With the comment period now closed, the final text will set the practical terms on which issuers and holders move to compliance ahead of the law's staggered deadlines.

Temporary Redemption Window Proposed for Holders

The NCA is asking Treasury to create a temporary window during which holders could redeem, sell, or convert their stablecoins if an issuer loses its authorization or otherwise fails to meet regulatory requirements. The association argues that regulatory changes should not leave customers unable to access funds.

Section 3 of the GENIUS Act generally restricts service providers from offering noncompliant stablecoins to U.S. customers beginning July 18, 2028, with restrictions on issuers expected to begin in January 2027. To bridge that transition, the association proposes a safe harbor that would allow exchanges to help customers exit affected tokens without penalty. Whether Treasury adopts the proposed window and safe harbor remains one of the open questions as the rulemaking moves forward.

In a separate regulatory track, European Union regulators classified Circle's USDC stablecoin for direct supervision beginning November 12. Those EU rules cover reserves, liquidity, and redemption planning, and operate separately from Treasury's proposal — a near-term reference point for issuers and holders while the U.S. rulemaking proceeds.

Court Orders Cited in Stolen-Fund Recovery Request

The NCA also asked Treasury to clarify whether issuers may replace stolen or mistakenly transferred stablecoins pursuant to court orders, and to confirm that such actions fall within the law's exception for lawful orders. The group is further seeking clear procedures for freezing tokens and notifying affected holders, proposing that those procedures align with standards used by the Financial Crimes Enforcement Network. Treasury's position on those points would define the steps available when stablecoins are stolen or sent in error.

Separately, Tether has challenged a Senate report concerning Iran-linked USDT wallets — a dispute that centers on sanctions compliance rather than the recovery measures addressed in the NCA's comments.

Self-Custody and Peer-to-Peer Transfers

On self-custody, the association wants Treasury to distinguish custodial providers from software developers who cannot control customer assets, arguing that wallet applications that merely display balances should not be treated as stablecoin sellers. It also asked that transfers between personal wallets, payments between individuals, and movements across accounts controlled by a single person remain outside the distribution restrictions that govern commercial distribution.

In industry developments, Coinbase has expanded its partnership with payments firmqeta to power stablecoin-backed cards, with the two companies planning to support business card programs through custody, conversion, and blockchain settlement services. That build-out is proceeding while the Section 3 rules remain unfinished, with product development and rulemaking advancing on separate tracks.