WASHINGTON — The Defense Credit Union Council is urging the Treasury Department to clarify that routine credit union payment, custody and technology services do not automatically trigger restrictions on issuing or distributing payment stablecoins.
In comments on Treasury’s proposed rule implementing Section 3 of the GENIUS Act, DCUC said it supports enforceable protections but wants clear distinctions between stablecoin issuance and services that support financial transactions.
Section 3 addresses statutory prohibitions and limitations on payment stablecoin issuance, offers and sales in the United States, according to DCUC.
DCUC said regulators should base requirements on the substance of an institution’s activities rather than its participation in a transaction involving a digital asset.
Rule Needs Clarification
“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,” DCUC said.
Compliance Protections Sought
DCUC also called for a safe harbor for credit unions that establish reasonable, documented compliance controls.
A credit union with appropriate controls should not be considered in violation solely because of an isolated, good-faith error that is promptly corrected, the council said. That protection should not extend to knowing participation in unlawful conduct or a failure to address identified risks, it added.
The council supported reasonable standards for determining whether a payment stablecoin is offered or sold to someone located in the United States.
DCUC also asked Treasury to define “reasonable due diligence” when a digital asset service provider relies on a foreign stablecoin issuer’s representations about its ability and willingness to comply with lawful orders or reciprocal arrangements.
Those standards should reflect the institution’s role, the nature of the arrangement and the information available, DCUC said. The final rule also should identify the information and documentation needed to meet the standard.
Distinguishing Credit Union Shares
Responding to Treasury’s question about digital assets redeemable in credit union shares, DCUC urged regulators to maintain a clear distinction between payment stablecoins and traditional credit union products.
“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,” the council said.
DCUC urged Treasury to distinguish between an asset that independently meets the statutory definition of a payment stablecoin and one whose redemption obligation is tied to another form of financial value.
Examples And Implementation Time
DCUC supported Treasury’s proposal to include interpretations in an appendix illustrating how the rule would apply.
It requested examples involving credit unions that provide account access, process payments, use third-party vendors or offer custody services without issuing or selling stablecoins themselves.
DCUC also urged Treasury to coordinate with the National Credit Union Administration and other federal regulators to promote consistent application of the requirements.
