The US Department of the Treasury has unveiled a proposal that would require stablecoin firms to establish stringent controls to detect and prevent illicit transactions. The proposed rules, announced by the Treasury's Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC), aim to regulate stablecoin issuers similarly to traditional financial institutions. The proposal outlines the need for stablecoin businesses to implement measures such as blocking, freezing, and rejecting suspicious transactions, as well as maintaining internal protections to comply with the Bank Secrecy Act. The move is part of the US government's efforts to implement the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which was passed last year.
The proposed rules will be open for public comment and potential revisions before being finalized. The Treasury Department's proposal emphasizes the importance of effective anti-money laundering programs and expects stablecoin issuers to identify and evaluate their risks. The 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 proposal has been welcomed by the crypto industry, which has been awaiting regulation to establish stablecoins as safe and reliable assets.
However, tensions remain in the wider crypto community, which has had a complex relationship with governments since its inception. The proposed rules are part of a broader effort by US financial regulators to establish guardrails for the crypto 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.