The US Department of the Treasury has proposed a set of regulations that would require stablecoin issuers to establish and maintain effective anti-money laundering and sanctions compliance programs. The proposed rules, announced by the Treasury's Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC), would enable stablecoin firms to identify, evaluate, and mitigate risks associated with illicit finance.
The regulations would also mandate the ability to block, freeze, and reject suspicious transactions, as well as implement internal controls to comply with the Bank Secrecy Act. The proposal is part of the Treasury Department's efforts to implement the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, a law aimed at regulating the stablecoin sector. The proposed rules will be open for public comment and potential revisions before being finalized. The Treasury Department's approach is focused on effectiveness, recognizing that financial institutions are best positioned to identify and evaluate their own risks.
The proposal emphasizes the importance of a risk-based approach, where stablecoin issuers would be expected to devote more attention and resources to higher-risk customers and activities. 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 issuers would be expected to act as allies in the agency's pursuit of entities identified as primary money laundering concerns.
On the sanctions front, OFAC would require stablecoin issuers to implement risk-based safeguards for stablecoin activity on primary or secondary markets, and to spot and reject transactions that may violate US sanctions. The proposed regulations have been welcomed by the crypto industry, which has been awaiting clear guidelines to establish stablecoins as safe and reliable assets. However, some tensions remain in the wider crypto community, which has had a tumultuous relationship with governments since its beginnings.
The proposed rules are part of a broader effort by US financial regulators to establish guardrails for the crypto sector, with other proposals and regulations expected to be announced in the coming months.