PTG Comments on Treasury Department Stablecoin Proposal
Oct 19, 2026
In a comment letter filed with the Treasury Department today, PTG argues that the proposed rules create significant uncertainty for principal trading firms that buy, sell, and provide liquidity in stablecoins on their own account. PTG urges Treasury to clarify that proprietary trading firms are not “Digital Asset Service Providers” (DASPs) when they trade solely for their own account and do not provide services to customers. The letter contends that the statutory term “digital asset service provider” was intended to capture intermediaries such as exchanges and custodians, not firms engaged in independent market-making, inventory management, or secondary-market trading. PTG warns that failing to make this distinction could discourage liquidity provision and undermine the effectiveness of the U.S. stablecoin framework.
PTG’s primary concern is Treasury’s interpretation of liability for “knowingly participating” in an unlawful stablecoin issuance. PTG argues that the proposed rule could incorrectly treat ordinary secondary-market activities, such as minting stablecoins for inventory and later selling them to counterparties, as participation in an illegal issuance. PTG recommends replacing vague concepts such as “market making,” “distribution,” and “newly issued” stablecoins with a clearer standard focused on whether a person knowingly provides substantial, issuer-directed assistance to a noncompliant issuer. The letter also calls for a safe harbor protecting firms that independently receive, hold, quote, purchase, sell, transfer, or redeem stablecoins without any agreement to distribute them on behalf of an issuer. PTG emphasizes that the risk of criminal penalties makes regulatory clarity particularly important.
The letter also addresses decentralized finance (DeFi), arguing that the proposed rules could inadvertently sweep in DeFi liquidity providers and offshore market participants that have no practical way to identify the location of counterparties on blockchain networks. PTG asks Treasury to confirm that statutory exclusions for liquidity-pool and similar DeFi activities remain effective and to modify proposed safe harbors so that liability depends on actual knowledge that a counterparty is in the United States, rather than a “reasonable belief” standard that may be impossible to satisfy in many on-chain environments. Overall, PTG argues that greater clarity would support Congress’s intent to foster stablecoin adoption, preserve market liquidity, encourage innovation in DeFi, and prevent a return to regulation through enforcement.