Proposed GENIUS Act Rules Would Bring Stablecoin Issuers Under Bank-Style AML Requirements

U.S. financial regulators have proposed new anti-money laundering (AML) and customer identification requirements that would subject permitted payment stablecoin issuers to compliance standards similar to those applied to traditional financial institutions. The proposal forms part of the implementation of the GENIUS Act, signalling a significant expansion of regulatory oversight across the digital asset sector.

The proposal was jointly issued by the Federal Reserve Board, the Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA). Under the proposed framework, payment stablecoin issuers would be classified as financial institutions under the Bank Secrecy Act (BSA), requiring them to establish and maintain formal Customer Identification Programs (CIPs) as part of their AML/CFT compliance programmes.

If adopted, issuers would be required to verify customer identities during onboarding using risk-based procedures, maintain records of customer information, and screen customers against applicable government watchlists. They would also need to implement controls designed to detect and mitigate money laundering, terrorist financing, sanctions evasion, and other illicit finance risks.

The proposal reflects regulators’ increasing concern over the growing role of stablecoins in payments, cross-border transfers, and digital asset markets. By extending bank-style AML obligations to stablecoin issuers, authorities aim to create a more consistent compliance framework across both traditional and digital finance while addressing financial crime vulnerabilities associated with rapidly expanding crypto payment ecosystems.

For compliance teams, the proposed rules could require significant operational changes. Stablecoin issuers may need to strengthen Know Your Customer (KYC) processes, enhance recordkeeping, implement more robust sanctions screening, clarify beneficial ownership information, and establish stronger governance over customer onboarding and third-party distribution channels.

Public comments on the proposal will remain open for 60 days following its publication in the Federal Register. While the rules are not yet final, they indicate a clear regulatory direction: stablecoin issuers are expected to build AML and identity verification frameworks comparable to those already required of banks and other regulated financial institutions.

Compliance Takeaway

The proposal marks a pivotal shift in the regulation of digital assets by bringing payment stablecoin issuers within the scope of established AML and customer due diligence requirements. Firms operating in the sector should begin assessing the adequacy of their KYC controls, governance frameworks, sanctions screening capabilities, and transaction monitoring programmes to prepare for a more stringent compliance environment under the GENIUS Act.