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. The proposed rules, which are open for public comment, aim to require stablecoin issuers to establish effective anti-money laundering programs, freeze and reject suspicious transactions, and comply with the Bank Secrecy Act. The move is part of the implementation of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, the first major crypto-sector law in the US.
The Treasury Department's effort emphasizes the importance of financial institutions identifying and evaluating their own risks, with a focus on effectiveness and deference to the industry's expertise. The proposed rules would require stablecoin issuers to halt flagged transactions, devote more attention to high-risk customers and activities, and scour their records for activity tied to individuals or entities flagged by FinCEN. Additionally, issuers would be expected to act as allies in the agency's pursuit of entities identified as primary money laundering concerns and implement risk-based safeguards for stablecoin activity on primary or secondary markets to spot and reject transactions that may violate US sanctions. The crypto industry, including stablecoin leaders such as Tether, Circle, and Ripple, has been awaiting regulation to establish their assets as safe and reliable.
The proposal is part of a broader effort by US financial regulators to sketch out guardrails for the crypto industry, with the GENIUS Act set to take full effect by 2027.