If a credit union processes a payment that happens to involve a stablecoin, that doesn’t make it a stablecoin issuer, and Treasury’s final rule should say so plainly.
That’s the core argument the Defense Credit Union Council (DCUC) sent to the U.S. Treasury in its comments on proposed rules for Section 3 of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. Section 3 covers the prohibitions and limits on issuing, offering, and selling payment stablecoins in the United States. DCUC backs the framework and praised Treasury for drawing transparent, enforceable lines. It just wants those lines drawn where credit unions can actually see them.
Don’t Blame the Delivery Driver for the Recipe
Think of a restaurant kitchen versus the courier who carries the food to your door. The kitchen makes the meal. The courier just gets it there. DCUC wants Treasury’s rule to treat issuers and intermediaries the same way, separating activities that involve issuing or distributing a payment stablecoin from those that merely support a payment, custody, or other financial service.
The council also asked regulators to judge the substance of an activity, not simply whether a digital asset touched the transaction. In its words:
“We support definitions that establish boundaries around incidental services and intermediaries so that credit unions are aware of what would require additional compliance measures and do not interpret the regulatory provisions more broadly than the statute requires. The final rule should clarify that providing ordinary banking, payment, custody, or technology services does not alone make a credit union an issuer or establish that it has offered, sold, or made a payment stablecoin available in violation of Section 3.”
Safe Harbors and “Reasonable” Due Diligence
DCUC supports reasonable standards for deciding whether a stablecoin is offered or sold to someone in the United States. Responding to Treasury’s question about safe harbors, it asked for one covering credit unions that put reasonable, documented compliance controls in place. Under that protection, an isolated, good-faith error that gets promptly corrected wouldn’t count as a violation, provided there was no knowing participation in unlawful conduct and no failure to respond to identified risks.
The council also wants Treasury to spell out what “reasonable due diligence” means when a digital asset service provider relies on a foreign issuer’s statements about its ability and willingness to comply with lawful orders or reciprocal arrangements. DCUC’s ask:
- Standards proportional to the institution’s role, the nature of the arrangement, and the information available.
- A clear list of the information and documentation needed to meet the standard.
Shares Are Not Stablecoins
Treasury asked whether a digital asset redeemable in credit union shares should count as a payment stablecoin. DCUC wants a clear line between stablecoins and traditional credit union products. It urged Treasury to separate an asset that independently meets the statutory definition from one whose redemption obligation is tied to a different kind of financial value.
“The fact that credit union shares may be converted into deposits or other monetary value should not alone determine whether a digital asset redeemable in those shares is a payment stablecoin.”
Examples, Coordination, and Time
Treasury plans to add interpretations in Appendix A to illustrate how the rule applies, and DCUC is all for it. It specifically asked for examples involving a credit union that provides account access, processes a payment, uses a third-party vendor, or offers custody without issuing or selling the stablecoin itself.
DCUC also urged Treasury to work with the National Credit Union Administration (NCUA) and other federal regulators so the rules apply consistently across the financial sector. And it asked for enough implementation time after the final rule is published, since credit unions must work with vendors, review policies and procedures, and manage internal controls.
What to Watch Next
Keep an eye on the final rule’s definitions of issuer and intermediary, whether a safe harbor makes the cut, and how much the Appendix A examples cover. The implementation timeline matters too. DCUC says it will keep engaging with Treasury as the requirements are finalized.
Credit Unions Aren’t Stablecoin Issuers: What DCUC Told Treasury About the GENIUS Act
If a credit union processes a payment that happens to involve a stablecoin, that doesn’t make it a stablecoin issuer, and Treasury’s final rule should say so plainly.
That’s the core argument the Defense Credit Union Council (DCUC) sent to the U.S. Treasury in its comments on proposed rules for Section 3 of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. Section 3 covers the prohibitions and limits on issuing, offering, and selling payment stablecoins in the United States. DCUC backs the framework and praised Treasury for drawing transparent, enforceable lines. It just wants those lines drawn where credit unions can actually see them.
Don’t Blame the Delivery Driver for the Recipe
Think of a restaurant kitchen versus the courier who carries the food to your door. The kitchen makes the meal. The courier just gets it there. DCUC wants Treasury’s rule to treat issuers and intermediaries the same way, separating activities that involve issuing or distributing a payment stablecoin from those that merely support a payment, custody, or other financial service.
The council also asked regulators to judge the substance of an activity, not simply whether a digital asset touched the transaction. In its words:
Safe Harbors and “Reasonable” Due Diligence
DCUC supports reasonable standards for deciding whether a stablecoin is offered or sold to someone in the United States. Responding to Treasury’s question about safe harbors, it asked for one covering credit unions that put reasonable, documented compliance controls in place. Under that protection, an isolated, good-faith error that gets promptly corrected wouldn’t count as a violation, provided there was no knowing participation in unlawful conduct and no failure to respond to identified risks.
The council also wants Treasury to spell out what “reasonable due diligence” means when a digital asset service provider relies on a foreign issuer’s statements about its ability and willingness to comply with lawful orders or reciprocal arrangements. DCUC’s ask:
Shares Are Not Stablecoins
Treasury asked whether a digital asset redeemable in credit union shares should count as a payment stablecoin. DCUC wants a clear line between stablecoins and traditional credit union products. It urged Treasury to separate an asset that independently meets the statutory definition from one whose redemption obligation is tied to a different kind of financial value.
Examples, Coordination, and Time
Treasury plans to add interpretations in Appendix A to illustrate how the rule applies, and DCUC is all for it. It specifically asked for examples involving a credit union that provides account access, processes a payment, uses a third-party vendor, or offers custody without issuing or selling the stablecoin itself.
DCUC also urged Treasury to work with the National Credit Union Administration (NCUA) and other federal regulators so the rules apply consistently across the financial sector. And it asked for enough implementation time after the final rule is published, since credit unions must work with vendors, review policies and procedures, and manage internal controls.
What to Watch Next
Keep an eye on the final rule’s definitions of issuer and intermediary, whether a safe harbor makes the cut, and how much the Appendix A examples cover. The implementation timeline matters too. DCUC says it will keep engaging with Treasury as the requirements are finalized.