U.S. regulators propose stablecoin customer-ID rule under GENIUS Act

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US stablecoin ID rule under GENIUS Act

Highlights

U.S. regulators proposed a joint rule requiring stablecoin issuers to implement identity verification and customer recordkeeping under the GENIUS Act.
The rule aligns stablecoin issuers’ obligations with the Bank Secrecy Act and is now in the public feedback stage after prior consultation received 450 comments.
Regulators are considering expanding customer-ID requirements to secondary market transactions, reflecting ongoing concerns about illicit finance risks in stablecoin markets.

Draft rule sets identity checks for issuers

As reported by CoinDesk, the Federal Reserve, Treasury Department, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp. and National Credit Union Administration have jointly released a proposed rule requiring stablecoin issuers to verify the identity of customers opening accounts.

The proposal says issuers must maintain reasonable procedures to verify a person's identity, keep records including name, address and other identifying information, and determine whether a person appears on government lists of known or suspected terrorists or terrorist organizations. The standards align stablecoin issuers with Bank Secrecy Act obligations already applied to more traditional financial firms.

The agencies are now seeking public feedback before moving to final joint rules and eventual enforcement. The current notice of proposed rulemaking follows a preliminary request for comment issued in September, when the Treasury received 450 comments on GENIUS Act implementation across this and other areas.

Crypto compliance debate widens beyond primary issuance

The rulemaking arrives as stablecoins remain dominated by crypto-native firms including Tether, issuer of USDT, and Circle, issuer of USDC, while traditional financial companies also push further into the market. Permitted payment stablecoin issuers are waiting for the U.S. regulatory framework to take final shape even as competition intensifies across the sector.

At the same time, Treasury's Financial Crimes Enforcement Network is pursuing a related rule to apply the GENIUS Act's anti-money laundering provisions to issuers. Fed Governor Michael Barr says he remains concerned the framework does not yet sufficiently address illicit finance risks in secondary market stablecoin transactions, and the 130-page proposal asks whether customer identification requirements should also extend to that activity.

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