US regulators are taking another major step toward bringing stablecoin issuers under the same compliance framework as traditional financial institutions.
The Financial Crimes Enforcement Network (FinCEN), together with federal banking agencies, has released a proposed rule that would require payment stablecoin issuers to implement formal customer identification programs (CIPs), as mandated by the recently enacted GENIUS Act.
The proposal would require issuers to verify customers’ identities before opening accounts, maintain detailed records, and screen users against government watchlists.
The move forms part of a broader effort by US authorities to establish comprehensive anti-money laundering (AML), counter-terrorism financing (CFT), and sanctions compliance standards for the rapidly growing stablecoin sector.
Stablecoin Issuers Would Need to Verify Customer Identities
Under the rule, payment stablecoin issuers would need to collect and verify key identifying information from customers before establishing an account relationship.
Individuals would need to provide their name, date of birth, address, and identification number, while entities would need to provide information, including their date of formation.
Issuers would also be required to establish risk-based procedures for verifying customer identities and create policies for situations where verification cannot be completed.
These procedures could include denying service, restricting account functionality, or imposing special conditions until the customer’s identity is confirmed.
The proposal also introduces recordkeeping requirements, requiring issuers to maintain customer identification records and verification documentation for specified periods.
In addition, customers would need to be notified that their identities are being verified as part of the account-opening process.
New Rules Aim to Combat Money Laundering and Terrorist Financing
A key component of the proposal is the requirement for stablecoin issuers to screen customers against government lists of known or suspected terrorists and terrorist organizations.
Regulators argue that such measures are necessary as stablecoins become increasingly integrated into global financial markets.
According to federal agencies, payment stablecoins possess characteristics, including rapid settlement, global accessibility, and price stability, that make them attractive for legitimate commerce but also potentially useful for illicit activities.
Authorities have repeatedly highlighted concerns about the use of digital assets in money laundering schemes, sanctions evasion, cybercrime, fraud, and terrorist financing.
The proposal follows a separate rulemaking effort launched earlier this year by FinCEN and the Office of Foreign Assets Control (OFAC), which would require stablecoin issuers to establish formal AML/CFT programs and maintain the ability to block or freeze transactions that violate US sanctions laws.
GENIUS Act Implementation Brings Stablecoins Closer to Banking Standards
The customer verification proposal represents one of the first major implementation steps under the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which became a law earlier this year.
The legislation formally classifies permitted payment stablecoin issuers as financial institutions for purposes of the Bank Secrecy Act.
Importantly, the proposed requirements would apply only to customers who maintain a direct relationship with a stablecoin issuer, such as those purchasing or redeeming stablecoins directly from the issuer.
Secondary-market transactions between users would generally remain outside the scope of the rule.
The proposal also allows issuers, under certain circumstances, to rely on customer identification procedures already performed by another federally regulated financial institution.
Regulators say this flexibility could reduce compliance burdens while preserving safeguards against illicit finance.
The American Bankers Association has previously supported efforts to ensure stablecoin issuers comply with standards comparable to those imposed on banks, arguing that consistent regulatory treatment is necessary as stablecoins become a more significant part of the US financial system.
With a 60-day public comment period now underway, the proposal signals Washington’s continued push to integrate stablecoins into the traditional regulatory framework while balancing innovation with financial security concerns.
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