The Blockchain Association has urged U.S. financial regulators to limit stablecoin issuers’ customer-identification duties to transactions in which an issuer directly serves a customer, seeking to keep peer-to-peer transfers and other secondary-market activity outside the scope of the proposed rules.
In a comment letter filed Friday, the Washington-based trade group backed a proposed approach under the GENIUS Act that would require permitted payment stablecoin issuers to operate customer identification programs, or CIPs. The association argued that the requirement should apply when a customer opens or maintains a direct relationship with an issuer in the primary market, rather than follow tokens through transactions between unknown wallet holders.
The filing responds to a joint rulemaking led by the Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, with participation from the Office of the Comptroller of the Currency, Federal Reserve, Federal Deposit Insurance Corporation and National Credit Union Administration. The public comment period closed on Aug. 21.
Primary-market focus for identity checks
The Blockchain Association’s central request is aimed at defining the practical reach of bank-style identity rules in a market where stablecoins can circulate far beyond their original issuer.
Under the approach supported by the group, a stablecoin issuer would verify customers who directly purchase tokens from the issuer or redeem them through a direct relationship. Once those tokens enter circulation, transfers between self-hosted wallets, trading venues, payment applications or other market participants would generally fall outside the issuer’s CIP responsibilities.
That distinction would preserve a division between an issuer’s onboarding process and the transaction-monitoring obligations that may apply to other financial intermediaries. It would also avoid requiring issuers to identify every holder of a token that can move across public blockchains without contacting the issuing company.
A customer identification program generally requires a regulated financial institution to collect and verify identifying information from customers opening accounts. Applying that framework to stablecoins has raised a more complicated question: whether holding or receiving a token on-chain creates an “account” relationship with the company that issued it.
The association said the agencies should draw that line narrowly. Its letter asked regulators to clarify the terms “account,” “customer” and “digital asset service provider,” which could determine how far the compliance regime extends across stablecoin distribution and use.
Definitions could shape issuer obligations
The trade group recommended that one-off redemption activity not automatically create an account relationship for CIP purposes. It also urged the agencies to exclude services and activities unrelated to stablecoins from the relevant definitions.
Those requests address scenarios that can arise when tokens circulate through multiple layers of the market. A person may acquire a stablecoin through a third-party platform, receive it as payment, or transfer it from another wallet without ever interacting with the issuer. Treating each of those holders as an issuer customer could give stablecoin companies compliance obligations over users they cannot reliably identify or contact.
The proposed definitions for digital asset service providers could also affect which firms sit between issuers and end users. A broad definition might bring wallet providers, software companies or other infrastructure services into a compliance structure designed for entities that directly handle customer relationships. The Blockchain Association’s filing argues for boundaries that reflect whether a firm is actually offering stablecoin-related financial services.
The group’s position does not seek to remove customer identification requirements from the GENIUS Act framework. Instead, it supports applying them at the point where an issuer has a direct customer relationship and can realistically perform verification.
Coordination with AML rules
The association also asked agencies to prevent overlapping obligations as regulators implement separate provisions of the GENIUS Act. Alongside the CIP requirements, the law calls for anti-money-laundering rules affecting permitted payment stablecoin issuers.
The letter requested that the effective date for the customer-identification rules be aligned with the timing of the separate AML rules. A staggered rollout could require issuers to build compliance systems twice, revise procedures after an initial launch or operate under partially completed requirements.
Coordinated deadlines would give issuers one implementation window for core controls covering onboarding, recordkeeping and financial-crime compliance. For regulators, it could also reduce the risk that firms interpret separate rules inconsistently before the full framework is in place.
The agencies’ final language will determine whether issuers can treat direct issuance and redemption as the main compliance touchpoints, or whether obligations extend further into on-chain circulation. That decision could shape how easily U.S.-regulated stablecoin issuers can distribute tokens through third-party services while maintaining the controls required under the new federal law.
GENIUS Act framework moves toward implementation
The GENIUS Act established a federal framework for permitted payment stablecoins, setting rules on who may issue them, the reserves supporting the tokens and the ability of holders to redeem them. The customer-identification proposal is part of the implementation process that turns those statutory requirements into operational rules for issuers.
The Blockchain Association’s comment places it alongside firms and industry groups seeking clear limits on how traditional financial compliance concepts apply to blockchain-based assets. Stablecoin issuers can identify users who purchase directly from them, but public blockchain transfers do not necessarily reveal the parties behind every wallet address.
Final rules that tie CIP duties to direct issuer-customer relationships would leave secondary-market controls to the entities that actually provide exchange, custody, payment or other financial services around a transaction. A broader interpretation could place issuers closer to the role of monitoring the movement of tokens after issuance, even where they have no direct relationship with the wallets involved.
For deeper context on U.S. stablecoin policy and the GENIUS Act’s impact, read this analysis next.
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