U.S. Regulators Move to Apply Bank-Style KYC Rules to Stablecoin Issuers
U.S. financial regulators are proposing to require many payment stablecoin issuers to verify customer identities using bank-like standards.
The Federal Reserve Board on Thursday released a joint proposal, developed with the Financial Crimes Enforcement Network (FinCEN), the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency (OCC) and the National Credit Union Administration (NCUA). The plan would require covered "permitted payment stablecoin" issuers to establish effective Customer Identification Programs (CIPs) under the Bank Secrecy Act (BSA).
Under the 117-page notice, permitted payment stablecoin issuers would be treated as financial institutions for BSA purposes. Before opening an account relationship, issuers would need to collect and verify core customer information, including name, address, date of birth (or formation date for entities) and an identification number.
The proposal also calls for risk-based procedures designed to form a "reasonable belief" that the customer's true identity is known. Regulators said programs should reflect factors such as an issuer's size, business model, customer base, account types and onboarding methods.
CIP obligations would attach when a user establishes a direct relationship with the issuer, including for issuance, redemption, custody, reserve management or other authorized services. By contrast, holding or transferring a stablecoin in the secondary market typically would not create an account relationship with the issuer and generally would not trigger CIP requirements. Regulators said requiring identity checks for every transfer would be impractical because issuers often do not have direct relationships with secondary-market users.
The agencies will accept public comments for 60 days after the notice is published in the Federal Register.
If finalized, the rule would bring many payment stablecoin issuers under the same antimoney-laundering (AML) compliance framework followed by banks and credit unions, increasing operational and compliance costs. It also draws a clearer line between issuer-facing activity, where CIPs apply, and broader market activity, where they generally do not, limiting friction for peer-to-peer transfers and intermediated trading.
The proposal implements provisions of the GENIUS Act and would extend beyond federally supervised issuers to those operating under eligible state regulatory frameworks authorized by the law. The GENIUS Act allows issuers with no more than $10 billion in outstanding stablecoins to operate under certified state regimes. On June 16, a bipartisan group led by Senator Cynthia Lummis urged Treasury Secretary Scott Bessent to clarify how states can obtain certification for their own stablecoin frameworks.
NCUA Chairman Kyle Hauptman said the proposal "mirrors existing customer identification requirements used by credit unions" and supports efforts to curb money laundering and terrorist financing. The NCUA has also advanced related work, including a proposed operational and risk-management rule for licensed payment stablecoin issuers last month and a separate proposal on issuer applications slated for February 2026.
Crypto industry stakeholders, including issuers, custody providers and state regulators, are expected to focus on how broadly the proposed CIPs would apply, how identity verification would work for programmatic and API-based onboarding, and how the rule would interact with state-certified regimes under the GENIUS Act.
