The US Department of the Treasury has proposed a set of rules for stablecoin issuers, which would require them to establish and maintain effective anti-money laundering and combating the financing of terrorism (AML/CFT) programs. The proposal, jointly issued by the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC), outlines the expectations for stablecoin businesses to prevent and report illicit transactions. The rules would mandate stablecoin issuers to have the ability to 'block, freeze and reject' transactions and implement internal controls to comply with the Bank Secrecy Act.
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 is seeking public comment on the proposal, which is expected to be finalized by 2027. The proposal emphasizes the importance of stablecoin issuers understanding and managing their own risks, and encourages them to identify and evaluate their money laundering, terrorist financing, and illicit finance risks. The rules would also require stablecoin issuers to cooperate with US authorities in pursuing specific targets and to scour their records for any activity tied to individuals or entities flagged by FinCEN.
Additionally, the proposal would require stablecoin issuers to implement risk-based safeguards for stablecoin activity on primary and secondary markets, and to spot and reject transactions that may violate US sanctions.