American Fintech Council Urges Treasury for Clear Stablecoin Framework Under GENIUS Act

The American Fintech Council (AFC) has formally responded to the U.S. Department of the Treasury’s proposed rules for the GENIUS Act, seeking to define the regulatory boundaries of stablecoin issuance. For fintech professionals, these recommendations aim to prevent regulatory arbitrage while ensuring that cross-border payments and self-custody remain viable within a clear, domestic legal framework.

What was announced

The AFC's submission responds to the U.S. Department of the Treasury’s notice of proposed rulemaking regarding Section 3 of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). The council is advocating for a "transaction-specific approach" to determine if a payment stablecoin is issued domestically. This framework would focus on whether the issuer is physically located in the U.S. or if they knowingly direct the initial transfer to a domestic recipient.

A primary concern for the AFC is the technical definition of "issuance." The council argues that issuance should be defined by the creation or transfer of an enforceable claim to an independent purchaser. Crucially, they urge the Treasury to exclude internal movements—such as minting tokens into a treasury wallet or transfers between wallets under common control—from this definition. This distinction is vital for firms that manage large inventories of tokens for liquidity purposes without intending to distribute them to the public immediately.

The council also recommends that the final rule differentiate between transactions that alter beneficial ownership and those that merely facilitate custody or on-ramping and off-ramping activities. To aid compliance, the AFC suggests the Treasury establish a public mechanism for identifying permitted stablecoin issuers. Furthermore, they advocate for a risk-based foreign issuer verification process that allows domestic providers to rely on written attestations and proportionate due diligence, while ensuring statutory protections for direct individual transfers and transactions utilizing self-custody software or hardware wallets.

"A workable stablecoin framework must provide clear administrable boundaries that protect U.S. consumers without unnecessarily restricting legitimate cross-border payment activity,"

Phil Goldfeder, CEO of the American Fintech Council.

The companies involved

The American Fintech Council (AFC) is a prominent industry association representing a diverse membership of responsible fintech companies and innovative banks. The organization positions itself as a leading voice for the modernization of the American financial regulatory system, focusing on policies that balance innovation with consumer protection. Its members range from digital-first lenders to blockchain infrastructure providers, all operating within the regulated financial ecosystem.

The AFC is frequently involved in high-level policy discussions with federal regulators, including the U.S. Treasury and the Federal Reserve, to ensure that new rules for digital assets and fintech-bank partnerships are both practical and effective. The council’s leadership includes Phil Goldfeder, who serves as CEO, and Ian P. Moloney, the Chief Policy Officer. By advocating for clear, objective standards, the AFC seeks to prevent regulatory arbitrage and maintain the United States' position as a global leader in financial technology. The association often acts as a critical intermediary between the fast-moving tech sector and the more deliberate pace of federal oversight, ensuring that legislative language like the GENIUS Act does not become obsolete before it is even implemented.

What this means

This intervention highlights the industry's urgent need for "safe harbors" regarding the technical mechanics of digital assets. By pushing for a distinction between internal minting and external issuance, the AFC is attempting to prevent the Treasury from inadvertently classifying the basic operational "plumbing" of stablecoins as regulated distribution events. The request for a public registry of permitted issuers suggests that intermediaries currently feel exposed to significant legal risk when facilitating transactions. If the final rule fails to provide these objective boundaries, the pressure on domestic exchanges and payment processors will intensify, potentially forcing them to restrict cross-border activity to avoid the risk of facilitating what could be deemed an "unlawful" issuance.