U.S. plan would require bank-style ID checks for stablecoin issuers

U.S. financial regulators issued a joint proposal requiring permitted payment stablecoin issuers to establish Customer Identification Programs similar to those used by banks. The draft rule is part of the GENIUS Act implementation framework and was released by FinCEN, the Federal Reserve, the Office of the Comptroller of the Currency, the FDIC and the NCUA.

Under the proposal, permitted payment stablecoin issuers would be treated as financial institutions for purposes of customer identification under the Bank Secrecy Act framework. Issuers would need to collect and verify identifying information from customers who open accounts directly with them, including names, addresses, dates of birth or formation, and identification numbers.

The requirement would apply to both federal and state-qualified permitted payment stablecoin issuers operating under the GENIUS Act. Regulators wrote that Customer Identification Programs help firms form a reasonable belief about customers’ true identities and support anti-money laundering and counter-terrorist financing efforts.

A central feature of the proposal is its limited scope in secondary markets. Wallet-to-wallet transfers, trading on exchanges and other secondary-market transactions would not automatically trigger identity checks by issuers, and typical blockchain addresses would not be treated as direct customers of the issuer.

Regulators noted that treating every blockchain address or transaction as a direct customer relationship would be difficult to implement and could interfere with the operation of stablecoin networks. The proposal concentrates compliance obligations on the direct relationship between an issuer and a customer, applying traditional financial safeguards at the point of issuance while allowing tokens to circulate on public blockchains.

The proposal is now part of the regulatory record for the GENIUS Act’s stablecoin rules. The agencies presented the measure as a way to align stablecoin issuance with existing anti-money-laundering and counter-terrorist financing requirements while preserving the ability of stablecoins to move through secondary markets.