US sets Aug. 21 deadline for stablecoin ID rule, excludes DeFi

On June 22, FinCEN, the Federal Reserve, the OCC, the FDIC and the NCUA published a joint proposal in the Federal Register that would require permitted payment stablecoin issuers to adopt written customer-identification programs. The notice opens a 60-day comment period that ends Aug. 21.

The proposal would treat permitted payment stablecoin issuers as financial institutions under the Bank Secrecy Act and require a risk-based Customer Identification Program, or CIP, appropriate to each issuer’s size and business. Issuers would need written procedures to form a reasonable belief about customer identities and to maintain records.

For individual customers, the proposal points to familiar identifying information: legal name, date of birth, address and an identification number. For legal entities, it calls for comparable identifying information and verification procedures.

The rule centers on an account relationship with the issuer. It covers direct interactions such as minting, redeeming, custody or other services the issuer provides directly to a customer.

The text excludes activity in which the issuer is not a direct transaction party. That category includes on-chain transfers, smart-contract interactions, liquidity pools and many centralized exchange ledger entries where users hold balances without a formal issuer account.

The agencies estimated that roughly 99% of stablecoin transaction activity occurs in the secondary market and that nearly all users of payment stablecoin products are secondary-market users, the notice states.

The proposal notes practical limits on extending identity checks beyond direct issuer relationships. Collecting customer information after tokens leave an issuer’s control would be difficult because issuers have limited ability to gather or verify information after initial minting or redemption. If regulators require identity controls in secondary markets, responsibility could fall to exchanges, hosted wallet providers, DeFi front ends, payment processors, analytics firms or entities that control smart-contract interfaces.

The agencies distinguished on-chain blockchain transfers from off-chain ledger trades at third-party exchanges and observed that most retail trading takes place off-chain. Decentralized exchanges and smart contracts typically lack a conventional customer file to support KYC, while centralized trading venues, app wallets and custody services raise different questions about coordination, data sharing and existing anti-money-laundering frameworks.

The proposal says stablecoin CIPs would mirror practices already used in banking, broker-dealer and money-transmission settings, requiring written policies, identity verification and recordkeeping. The agencies described the text as clarifying issuer obligations while leaving broader questions about secondary-market requirements for potential future rulemaking or guidance.

The Federal Register notice sets Aug. 21 as the deadline for public comments. Issuers, exchanges, wallet companies, banks, consumer advocates and compliance vendors may submit comments during the 60-day period.