The US Department of the Treasury has unveiled a joint proposal by the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC), outlining stringent controls for stablecoin businesses to prevent illicit activities and comply with the Bank Secrecy Act. The proposed rules, which are open for public comment, would require stablecoin issuers to have the ability to 'block, freeze, and reject' transactions and establish internal safeguards to prevent money laundering and terrorist financing. The proposal is part of the implementation of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which aims to regulate the stablecoin industry. The Treasury Department's effort emphasizes the importance of effective anti-money laundering programs and expects stablecoin issuers to identify and evaluate their risks.
The proposed rules would also require stablecoin issuers to cooperate with authorities in pursuing targets and to implement risk-based safeguards for stablecoin activity on primary and secondary markets. 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 in the payment stablecoin ecosystem.