The US Department of the Treasury has unveiled a proposal that would require stablecoin firms to adopt stringent measures to prevent and detect malicious transactions, including the ability to block, freeze, and reject suspicious transactions. The proposed rules, put forth by the Treasury's Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC), aim to bring stablecoin businesses in line with traditional financial institutions in terms of anti-money laundering and combating the financing of terrorism (AML/CFT) regulations. The proposal is part of the implementation of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which was enacted last year.
The new rules would also require stablecoin issuers to maintain robust internal controls, including risk-based programs to identify and mitigate potential money laundering and terrorist financing risks. Furthermore, the proposal outlines expectations for stablecoin firms to cooperate with US authorities in investigating and preventing illicit activities, including the identification of high-risk customers and activities.
The proposed regulations are subject to a public comment period and may undergo revisions before being finalized. The move is seen as a significant step towards establishing a regulatory framework for the stablecoin industry, which has been seeking clarity on its obligations to prevent illicit activities.
The Treasury Department's effort is also intended to reassure the industry that it is committed to supporting innovation in the stablecoin sector while ensuring that firms operate in a safe and sound manner.