The US Department of the Treasury has put forth a joint proposal from the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC), outlining stringent controls for stablecoin businesses. These controls include the ability to block, freeze, and reject suspicious transactions, as well as internal protections to comply with the Bank Secrecy Act.
The proposal 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 is seeking public comment on the proposal, which is designed to prevent money laundering, terrorist financing, and other illicit activities in the stablecoin market. Stablecoin issuers will be expected to identify and evaluate their own risks, with a focus on effectiveness, and to devote more attention and resources to higher-risk customers and activities.
The proposal also requires stablecoin issuers to cooperate with US authorities in pursuing specific targets and to implement risk-based safeguards for stablecoin activity on primary and secondary markets. The goal of the proposal is to protect the US financial system from national security threats while allowing American companies to continue innovating in the payment stablecoin ecosystem.