The US Department of the Treasury has unveiled a proposal that would require stablecoin issuers to implement robust controls to prevent money laundering, terrorist financing, and other illicit activities. 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 maintain effective anti-money laundering programs and comply with the Bank Secrecy Act.
The proposed rules would also require stablecoin issuers to block, freeze, and reject suspicious transactions, as well as to identify and report high-risk customers and activities. The Treasury Department's effort aims to establish a tailored approach for stablecoin firms, while also acknowledging that companies are best positioned to identify and evaluate their own risks.
The proposal is open for public comment and may be revised before its finalization. The move is part of the implementation of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which was passed last year. The Act aims to provide a regulatory framework for the stablecoin industry, and the proposed rules are a significant step towards achieving this goal.
The rules would also require stablecoin issuers to comply with US sanctions and to implement risk-based safeguards to prevent sanction violations. The proposal has been welcomed by the crypto industry, which has been awaiting regulatory clarity to establish stablecoins as a safe and reliable asset class.
However, some tensions remain in the wider crypto community, which has historically been skeptical of government regulation. The proposed rules are expected to be finalized by 2027, and firms are already taking steps to comply with the new regulations. The Treasury Department's proposal is part of a broader effort to regulate the crypto industry, with other regulators, such as the Federal Deposit Insurance Corp, also issuing proposals for stablecoin issuers.