If you intend to sell or donate your blankets, you are not just a hobbyist, you are what the government considers a small batch manufacturer. You may only be on Etsy, but you are a manufacturer of consumer products. and if they are for children, a manufacturer of children's products and all the rules and regulations apply. You should apply for a Small Batch Manufacturer exemption, it's free, and painless, and is good for one year only and has to be reapplied for each year as its based on your sales from the previous year.
1. There are 2 types of labeling you will need to comply with. 1, the FTC ( the Federal Trade Commission) labeling for country of origin of the fiber content for bedding and 2. the CPSIA ( the Consumer Product Testing Commission safety law called the Consumer Product Safety Information Act) tracking labeling. You may combine the information onto one tag if you choose, but all the information must be there. The CPSIA tracking label must have Your company name, (you may use your Etsy store name URL or your company's separate web site URL), the city, state, country where you are located. The customer has to be able to find you if they need to get in contact with you. And the date of manufacture. The year is not sufficient, month or season would be the minimum. There need to be sewn in as they are permanent labels.
2. Your blankets won't need 3rd party testing as you have described them, but you will need to make a Certificate of Compliance for your files. You will need to list every regulation you need to comply with and how you have complied. The sample to follow is shown in the pinned thread at the top of the discussions under the CPSC ombudsman's thread. You have to just find the link to the sample certificate of compliance. These aren't given to the retail customers, (like your Etsy customers), but are for the government if they need to see your compliance. You are basically certifying that your products are safe, and the reasons that they are.
3. Other than that you appear to be okay. Do remember if you change or add additional items to sell, you will need to make a new Certificate of Compliance for the other items and may need different labeling.
