The US Department of the Treasury has unveiled a proposal that would require stablecoin issuers to establish stringent controls to prevent and detect illicit transactions, including the ability to block, freeze, and reject suspicious transactions. 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 comply with the Bank Secrecy Act and maintain effective anti-money laundering programs. The rules are part of the implementation of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which aims to regulate the stablecoin industry.
The proposal emphasizes the importance of financial institutions taking responsibility for identifying and mitigating their own money laundering and terrorist financing risks. Stablecoin issuers would be expected to devote more attention and resources to higher-risk customers and activities and to cooperate with US authorities in pursuing targets and entities identified as primary money laundering concerns.
The proposal also requires stablecoin issuers to implement risk-based safeguards to detect and reject transactions that may violate US sanctions. The introduction of these regulations is seen as a significant step towards establishing stablecoins as a safe and reliable asset class, and the crypto industry is awaiting further clarification on the rules.
The proposal is open for public comment and potential revisions before its finalization.