Fed seeks tighter stablecoin issuer oversight, proposes bank-style ID requirements

The Federal Reserve Board, in conjunction with the Financial Crimes Enforcement Network (FinCEN), Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and National Credit Union Administration (NCUA), has proposed requiring permitted payment stablecoin issuers (PPSIs) to implement customer identification programs (CIPs) comparable to those used by banks and credit unions.

Regulators aim to tighten compliance standards for stablecoin issuers

The joint proposal, announced Thursday, implements key provisions of the GENIUS Act, which was enacted in July 2025. Under the proposal, eligible stablecoin issuers would be treated as financial institutions under the Bank Secrecy Act (BSA), subjecting them to anti-money laundering (AML) and know-your-customer (KYC) requirements.

"Obligations under this proposal are comparable to existing CIP requirements for other financial institutions, such as banks, brokers-dealers, mutual funds, and futures commission merchants and introducing brokers in commodities," regulators wrote in the proposal.

It also requires issuers to establish risk-based procedures for verifying customers' identities when opening accounts.

The requirements include collecting and verifying information such as a customer's name, address, date of birth and identification number, as well as screening customers against government terrorist watch lists.

"This rulemaking implements the GENIUS Act's directives to treat permitted payment stablecoin issuers as financial institutions under the Bank Secrecy Act and to require issuers to maintain an effective customer identification program," the proposal states.

The requirements would apply to both federally supervised and qualifying state-supervised stablecoin issuers, creating a uniform compliance framework across the sector.

The proposal reflects regulators' efforts to address illicit finance risks associated with stablecoins, which have become increasingly popular for payments, trading and storing value. By extending bank-style customer identification requirements to licensed issuers, regulators aim to reduce risks such as money laundering, terrorist financing and sanctions evasion within stablecoin environments.

Officials said the framework is designed to strengthen market integrity while supporting responsible innovation in the digital asset sector.

The proposal forms part of the broader GENIUS Act framework that governs licensing, reserve requirements, capital standards and risk management for stablecoins. Public comments on the proposal will be accepted for 60 days after its publication in the Federal Register.