The US Department of the Treasury has proposed a set of rules for stablecoin issuers, aiming to regulate them similarly to traditional financial institutions. The proposal, jointly introduced by the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC), outlines the necessary controls that stablecoin businesses must establish, including the ability to block, freeze, and reject suspicious transactions. The rules are part of the implementation of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which is the first major crypto-related law in the US.
The proposal is open for public comment and potential revisions before its finalization. The Treasury Department emphasizes that financial institutions are best positioned to identify and mitigate their own money laundering and illicit finance risks. The proposed rules focus on the effectiveness of these measures and suggest that companies with adequate money-laundering prevention programs are generally safe from enforcement actions, unless they demonstrate significant or systemic failures.
Stablecoin issuers will be expected to halt flagged transactions, devote more attention to high-risk customers and activities, and cooperate with US authorities in pursuing specific targets. They will also be required to implement risk-based safeguards for stablecoin activity on primary and secondary markets, spotting and rejecting transactions that may violate US sanctions. The proposal is seen as a significant step towards establishing stablecoins as a safe and reliable asset class, and the crypto industry is awaiting further regulation to clarify the rules and guidelines for the sector.
The decentralized finance (DeFi) sector, which seeks to eliminate intermediaries and maintain direct interactions, still requires clarification on illicit-finance controls. The Treasury Department's proposal is part of a broader effort to regulate the crypto industry, with other regulatory bodies, such as the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp, also introducing their standards and procedures for issuers.