Regulators Propose ID Checks for Issuers, Not Wallet Transfers

A joint proposal published in the Federal Register on June 22, 2026 would require permitted payment stablecoin issuers to collect basic identity information before opening accounts used to mint or redeem tokens. Peer-to-peer wallet-to-wallet transfers would not trigger those issuer checks under the draft rule.

The proposal was drafted by five federal agencies: the Financial Crimes Enforcement Network, the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corporation and the National Credit Union Administration. The public comment period closed on August 21, and the agencies said they will finalize definitions and other details before issuing a final rule.

Under the proposal, identity collection would mirror Bank Secrecy Act standards. Issuers would be required to obtain a customer’s name, address, date of birth or formation, and an identification number before opening an account that permits issuance, redemption, conversion, repurchase or custody of a stablecoin.

Regulators and industry representatives framed the rule around a distinction between primary and secondary markets. The primary market covers direct issuer relationships where tokens are created or destroyed. The secondary market covers transfers after tokens exist, including wallet-to-wallet payments, exchange trades and protocol-level transfers. Regulators estimate roughly 99% of stablecoin activity occurs in the secondary market.

The agencies and several industry commenters said the technical and statutory features of the market justify the distinction. Issuers typically do not intermediate or approve secondary-market transfers, and many transfers are executed by smart contracts that do not disclose counterparty identities. In a formal comment, the Blockchain Association argued that applying issuer obligations to secondary transfers would exceed limits in the GENIUS Act and be technically infeasible.

Key terms remain undefined in the draft and will affect the rule’s scope. The agencies have sought comment on the meanings of “account,” “customer,” and “digital asset service provider.” Stakeholders asked for clarity on whether a one-off redemption creates an account relationship and how redemptions routed through exchanges should be treated, including whether an exchange should count as the issuer’s direct counterparty when it forwards customer information.

The proposal leaves verification methods open. Commenters requested permission for electronic collection of information, reliance on other regulated institutions with safeguards, and acceptance of modern identity tools such as cryptographic methods and zero-knowledge proofs. One industry submission asked regulators to allow taxpayer identification numbers obtained through trusted third-party providers, analogous to an exemption available to traditional banks.

The draft sets a proposed compliance timeline in which final rules would take effect 12 months after publication, giving issuers a year to build programs. Separately, the GENIUS Act’s licensing framework for payment stablecoins begins on January 18, 2027. Industry groups asked regulators to coordinate effective dates to avoid overlapping compliance programs.

For retail holders, the proposal as drafted would leave most wallet-to-wallet transfers outside the issuer verification requirement because issuers are not parties to those transactions. Direct minting and redemption relationships are commonly held by verified institutional counterparties rather than individual retail users. Exchanges and platforms will continue to enforce their own customer identification rules under existing supervision.

Regulators must resolve the open definitions and acceptable verification methods before publishing final rules. Once finalized, the compliance clock for issuers would begin based on the effective date set in the final rule.