Blockchain Association Urges Clear DeFi and Offshore Issuer Rules for GENIUS Act Implementation

⚡️ Industry feedback cuts straight to core blind spots in regulatory implementation. Last week, the U.S. Blockchain Association formally submitted public comment to the Department of the Treasury, laying out targeted revision recommendations for the implementing rules of the GENIUS Act. While many dismiss this as routine industry association public relations, the comment directly addresses the two most ambiguous core gaps in the current digital asset regulatory framework: the regulatory boundaries for decentralized finance (DeFi), and the compliance assessment criteria for offshore issuing entities. If adopted, these requests could shape the global crypto industry’s compliance trajectory for the next 3-5 years ?. As the most representative stablecoin regulatory bill in the U.S. market today, every implementing clause of the GENIUS Act will directly influence global digital asset pricing logic and liquidity rules, even shaping regulatory policy direction for other major economies to become a global reference for digital asset oversight.

Ambiguous DeFi Classification Rules Stifle Innovation Teams

? Contrary to the common assumption that regulators intend to bring all smart contract projects under licensed oversight when addressing DeFi rules, the current text of the GENIUS Act provides no actionable, enforceable classification standard for “decentralized finance” at all. Under the existing vague language, any project with traceable operational affiliated parties could be classified as a covered issuer required to meet full registration and disclosure obligations. Conversely, if rules are too loose, bad actors could exploit the DeFi label to evade all regulatory requirements, packaging high-risk speculative products as unhosted on-chain protocols that leave ordinary users bearing all downside risk. This two-sided ambiguity leaves legitimate DeFi teams building real technical innovation hesitant to launch compliant products; many DeFi projects originally planning to serve U.S. users have already proactively cut ties with the U.S. market to avoid arbitrary regulatory penalties stemming from unclear rules.

Vague Offshore Issuer Rules Raise Market Access Barriers

? While many assume offshore issuer rules are simply access thresholds for non-U.S. project teams, the ambiguity of this clause effectively bars the highest-quality global digital asset projects from entering the U.S. compliant market. The current bill text does not define clear access criteria for offshore issuers: it does not outline whether offshore projects already subject to equivalent strict domestic oversight can access a streamlined entry path to the U.S. market, nor does it explicitly prohibit which high-risk offshore projects may serve ordinary U.S. users. This ambiguity risks two extreme outcomes: either all offshore projects are locked out via a one-size-fits-all ban, cutting U.S. users off from the world’s most valuable digital asset innovation and causing them to miss the dividends of technological progress; or unqualified projects exploit rule loopholes to sell high-risk speculative products to U.S. users, leaving ordinary investors holding the bag when losses materialize.

Industry Requests Seek a Balance Between Innovation and Regulation

⚡️ Contrary to the narrative that the Blockchain Association is pushing for an unregulated free-for-all for the industry, all its proposed revisions are fundamentally focused on striking a balanced middle ground between innovation and oversight. The association’s comment never calls for regulatory loopholes for the sector; in fact, it explicitly recommends establishing strict penalty rules for projects that maliciously exploit the DeFi label to run scams. The association only asks regulators to clarify that once a project has achieved fully decentralized governance, with no centralized team capable of unilaterally adjusting protocol rules or misappropriating user funds, it should no longer be regulated as a licensed centralized issuing entity. This clear boundary will allow teams building genuine technical innovation to commit to long-term R&D without constant fear of exorbitant regulatory fines from ambiguous rules, or being forced to choose between compliance and innovation.

Clear Rules Will Ultimately Benefit Ordinary Market Participants

? While many assume clear regulatory rules only cut compliance costs for industry institutions, the ultimate beneficiaries of these clarified standards are every ordinary user participating in the digital asset market. Under the current ambiguous rule environment, ordinary users cannot reliably distinguish between compliant operating projects and speculative products operating in regulatory gray zones, making them easy targets for marketing pitches promising “high returns with zero risk” — with no traceable party held accountable when projects collapse. If DeFi regulatory boundaries are clarified, users will be able to clearly identify which protocols are security-audited and free of centralized fund misappropriation risk; if offshore issuer access rules are clarified, users will be able to quickly distinguish which projects have formal regulatory backing, reducing their risk of being exploited by malicious projects at the root, rebuilding market trust, and cutting down on unnecessary speculative hype.

Constructive Interaction Drives Long-Term Sustainable Industry Growth

Looking at the global track record of digital asset regulation, no bill that has driven long-term industry progress was perfectly drafted from its initial version. Instead, effective rules are refined iteratively via feedback from industry, regulators, and users, turning vague language into actionable, clear standards. The Blockchain Association’s proposed revisions to the GENIUS Act represent exactly this kind of constructive two-way interaction: it is neither regulators unilaterally imposing overly restrictive shackles on the sector, nor the industry growing entirely unmoored from oversight. The balanced outcome of this process will allow digital asset technology to deliver real value to the real economy, rather than becoming a tool for a small number of actors to extract speculative arbitrage. As implementing rules are gradually clarified, the industry will shift from its prior unstructured growth phase to a more sustainable long-term innovation track, with more high-value real-world blockchain applications launching to deliver inclusive financial value to ordinary users.