The Federal Reserve released a regulatory proposal on Thursday that would obligate payment stablecoin issuers to operate customer identification programs designed to deter illegal financial activity.
Under the plan, certain firms issuing payment stablecoins would face requirements resembling those already in place for banks and credit unions, the Fed said in its statement. The draft regulation is presented as a means to apply comparable anti-illicit-finance safeguards across entities that move digital payments.
The move comes amid recent efforts by banking regulators to bring cryptocurrency-related activities into the traditional banking perimeter following the enactment of the Genius Act, a stablecoin framework that became law last year. The Fed noted these changes as part of the context for its proposal.
Fed Governor Michael Barr commented on the limits of the current framework in addressing financial crime risks. "While some digital asset service providers are subject to anti-money laundering and anti-terrorist financing requirements in their home jurisdiction, it is far too easy for bad actors to evade these restrictions and operate without detection when transacting in digital assets," Barr said. He previously served as the Fed’s top bank supervisor.
The proposal will be published for a 60-day public comment period, allowing stakeholders and the public to submit views before any final rule is adopted.
The Fed characterized the measure as creating parity between certain stablecoin issuers and depository institutions when it comes to customer identification obligations. The agency framed the requirement as targeted at preventing exploitation of digital-asset payment channels for illicit purposes.
No additional timetables or implementation details were provided in the statement beyond the 60-day comment window. The Fed's announcement emphasized the proposal's focus on identification programs as a tool to strengthen anti-money laundering and anti-terrorist financing defenses within payment stablecoin activity.
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