The US Department of the Treasury has put forth a proposal that would require stablecoin issuers to establish and maintain effective anti-money laundering and sanctions compliance programs. This would involve implementing controls to detect, prevent, and report suspicious transactions, as well as adhering to the Bank Secrecy Act. The proposal, a joint effort by the Treasury's Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC), aims to provide a tailored approach for stablecoin firms, allowing them to identify and mitigate their unique risks. The rules would also enable stablecoin issuers to freeze, block, or reject transactions flagged as potentially illicit.
The Treasury Department's effort is part of the implementation of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which was passed last year. The proposal is open for public comment and potential revisions before its finalization.
The move is seen as a significant step towards regulating the stablecoin industry, with the goal of protecting the US financial system from national security threats while allowing American companies to innovate and compete in the payment stablecoin ecosystem. The crypto industry, including major players such as Tether, Circle, and Ripple, has been awaiting regulation to establish their assets as safe and reliable. However, tensions remain, particularly in the decentralized finance (DeFi) sector, which seeks to minimize intermediaries and maintain direct interactions.
The illicit-finance controls for DeFi are still unresolved, and wider swaths of crypto activity need to be addressed. The proposal is part of a broader effort by US financial regulators to establish guardrails for the crypto industry, with the GENIUS Act set to take full effect by 2027.