US Treasury Proposes AML Standards for Stablecoin Issuers

The GENIUS Act treats permitted payment stablecoin issuers as financial institutions under the Bank Secrecy Act and requires them to maintain customer identification programs, or CIPs. The policy challenge is determining when a customer relationship begins after a token leaves the issuer and moves through exchanges, custodial or self-hosted wallets, and other intermediaries — a decision that could reshape compliance costs across the stablecoin market.

FinCEN, the Federal Reserve, FDIC, OCC and NCUA jointly proposed the rule on June 18, 2026, with public comments due by Aug. 21. Crypto industry groups urged regulators not to make ordinary wallet-to-wallet transfers subject to issuer-level KYC, while seeking clearer treatment of exchanges, custodial and non-custodial wallets, third-party providers and direct redemptions. The agencies must also decide whether an issuer may rely on identity checks performed by another regulated institution. No final rule or effective date has been set.

As cryptocurrency adoption grows, stablecoins have become a major channel for criminals to launder money and evade sanctions because of their price stability and ease of cross-border transfer. To combat worsening digital-asset crime, the Financial Action Task Force, the global anti-money-laundering standard setter, has long promoted the Travel Rule, which requires virtual-asset service providers to share information on both parties to a transaction. The measure is a key tool for curbing cross-border technology-enabled financial crime.

FATF’s latest 2026 update found that as many as 83% of surveyed jurisdictions had enacted the Travel Rule, but only about 40% were enforcing and supervising it in practice. The report warned that criminal groups are using stablecoins and developing dedicated tokens designed to circumvent asset freezes, leaving regulatory effectiveness seriously behind the threat. FATF called on governments to accelerate anti-money-laundering enforcement to close a widening gap in cross-border financial security.

The GENIUS Act, passed in 2025, established a federal regulatory framework for payment stablecoins in the United States, shifting attention to how issuers will meet their anti-money-laundering obligations. Stablecoins can move quickly across borders and, without adequate identity checks, could be used for money laundering or terrorist financing. Whether issuers must identify customers in the same way as banks will therefore help determine the regulatory standard applied to crypto assets.

The latest draft, jointly proposed by regulators including the Federal Reserve and the Federal Deposit Insurance Corporation, would require stablecoin issuers to establish customer identification programs under the Bank Secrecy Act and collect and verify users' identities. The standards would be aligned with those for regulated banks. The proposal is an implementing measure for the 2025 GENIUS Act and remains at the proposal stage, with no final effective date. Reports also did not disclose any amounts involved.

The Financial Action Task Force (FATF) is an intergovernmental body that sets global standards for combating money laundering and terrorist financing. Stablecoins’ relative price stability, high liquidity and rapid cross-border transfer capabilities support legitimate payments but also create money-laundering risks. Unhosted wallets can bypass regulated intermediaries, further widening gaps in sanctions enforcement.

In a thematic report published on March 3, 2026, FATF estimated that crypto fraud and scam transactions exceeded $51 billion in 2024. Stablecoins accounted for 84% of the $154 billion in illicit virtual-asset transaction volume in 2025. The report said North Korea used USDT to launder money and Iran used it to finance weapons proliferation. It urged countries to regulate issuers and monitor peer-to-peer transactions and unhosted wallets.