U.S. agencies seek stablecoin customer-ID rules akin to banks in new GENIUS Act rule

The U.S. Federal Reserve, Treasury Department and other financial regulators are pushing a new stablecoin rule that treats issuers like other regulated financial firms when it comes to identifying their users, releasing their draft of the proposed rule on Thursday.

This effort marks the latest step in implementing last year's Guiding and Establishing National Innovation for U.S. Stablecoins ($GENIUS) Act — the first major crypto law that puts a key aspect of the industry on the map of U.S. financial regulation. Like more traditional financial firms, such as banks and brokerages, U.S. stablecoin issuers must meet the demands of the Bank Secrecy Act and maintain a system of verification for customers' identities, which is meant to combat money laundering, illicit finance and terrorism funding.

These standards, according to the rule proposal, “must include reasonable procedures for: (1) verifying the identity of any person seeking to open an account to the extent reasonable and practicable; (2) maintaining records of the information used to verify a persons identity, including name, address, and other identifying information; and (3) determining whether the person appears on any lists of known or suspected terrorists or terrorist organizations provided to the financial institution by any government agency.”

The Fed opened a 60-day public comment period alongside the other agencies in the joint effort, including the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., National Credit Union Administration and the Treasury Department's financial-crimes arm.

In September, the regulators had issued a more preliminary document seeking comments to direct their $GENIUS implementation in this and other areas, and the Treasury received 450 comments. This new stage is known as a “notice of proposed rulemaking,” which comes with another comment period and review before the agencies can eventually issue final joint rules and begin enforcing the regulations.

The Treasury's Financial Crimes Enforcement Network (FinCEN) has pursued its own related rule to apply the $GENIUS Act anti-money laundering provisions on issuers.