The U.S. Treasury Department took another big step towards shaping the use of dollar-backed stablecoins, released joint rule proposal for stablecoins that require issuers to build serious defenses against money laundering and sanctions evasion.
Regulators team up under the GENIUS Act
The Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC) jointly released the proposal, which applies to stablecoin issuers under the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act).
This move comes as part of the combined regulatory push across federal agencies, all firms racing towards the January 2027 compliance deadline set by the GENIUS Act.
The GENIUS Act already requires stablecoins to be fully backed 1:1 by U.S. dollars or highly liquid assets, along with annual audits for larger issuers and other baseline standards.
Treasury says rules will protect and support growth
Treasury Secretary Scott Bessent framed the proposal in favour of the current administration. stating that President Trump is strengthening American leadership in digital financial technology, adding to it. This proposal will protect the U.S. financial system from national security threats without hindering American companies’ ability to forge ahead in the payment stablecoin ecosystem.
At the center of the proposal, the rule brings regulated stablecoin issuers under the Bank Secrecy Act umbrella, treating them much like traditional financial institutions when it comes to spotting and stopping illicit finance.
Strict anti-money laundering requirements
Issuers will need to put in place robust anti-money laundering (AML) and countering the financing of terrorism (CFT) programs, complete with risk assessments, mitigation steps, and suspicious activity reporting.
On the sanctions side, they must maintain an effective compliance program featuring risk-based internal controls, regular audits, and testing. Above all, their stablecoins will have to be designed with the technical ability to block, freeze, or reject transactions that invades sanctions.
Issuers will also have to appoint a compliance officer in charge of these programs. That person must be based in the United States and cannot have certain criminal convictions, such as those involving insider trading, cybercrime, or financial fraud.
FinCEN signaled it won’t come down hard on every misstep. The agency said it would take a measured supervisory approach and generally avoid enforcement actions or major unless an issuer shows a significant or systemic failure to maintain its program.
Proposal open for public feedback
The proposal is now open for public comments over the next 60 days.
This latest release follows similar rulemaking from other agencies. Just a day earlier, the Federal Deposit Insurance Corporation (FDIC) proposed rules around reserve requirements and made clear that stablecoins won’t qualify for federal deposit insurance. Earlier this year, the Office of the Comptroller of the Currency (OCC) also laid out its vision for overseeing certain bank-affiliated issuers.
The Treasury’s approach tries to strike a balance: give law enforcement the tools it needs while avoiding overly burdensome rules that could push innovation offshore.
Industry watchers will be examining the particulars of the AML requirements. However, they’ll also be considering how these regulations intersect with the broader conversations about stablecoins. This encompasses the current debates about yields and their potential impact on traditional bank deposits.
