New Stablecoin Rules by U.S. Treasury Aim to Strengthen Financial Security

TLDR

• The U.S. Treasury Department has proposed new stablecoin rules to address money laundering and terrorism financing risks.
• The rules, released by FinCEN and OFAC, require stablecoin issuers to implement robust AML and CFT programs.
• Issuers will need to maintain risk-based internal controls and undergo regular audits to comply with sanctions regulations.
• The Treasury Secretary emphasized that the rules would protect the U.S. financial system without hindering innovation.
• The proposed regulations align with the GENIUS Act and set a compliance deadline of January 2027 for stablecoin issuers.

The U.S. Treasury Department’s financial crimes bureau and sanctions agency have proposed new rules for stablecoin issuers. These rules aim to strengthen measures against money laundering and terrorism financing. The joint proposal, released by the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC), follows the new GENIUS Act and seeks to ensure compliance with national security concerns while fostering innovation.

FinCEN’s Focus on Anti-Money Laundering (AML)

The proposed rules from FinCEN are designed to safeguard the U.S. financial system from illicit activities. Stablecoin issuers would need to implement comprehensive Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) programs. These programs would involve risk identification, monitoring, and mitigation procedures.

According to FinCEN, it would take a “measured supervisory approach” to enforcement. The agency emphasized that it would not take action unless there was a “systemic failure” in a payment stablecoin issuer’s AML or CFT program. The rule aims to keep stablecoin issuers in line with legal standards while avoiding unnecessary regulatory burdens.

New Stablecoin Rules Focus on Sanctions and AML

Alongside FinCEN’s AML/CFT requirements, OFAC’s proposed rules focus on sanctions compliance. Issuers would be required to develop risk-based internal controls to prevent sanctions violations. These controls would include regular testing and auditing of their systems to ensure they comply with OFAC regulations.

The Treasury Department also made it clear that the rule would not impede innovation. Treasury Secretary Bessent stated, “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.” The rules are part of a broader initiative to regulate stablecoins under the GENIUS Act, which mandates full backing of stablecoins with liquid assets.

The rule proposal requires public comments to be submitted within 60 days. Federal agencies are working toward a January 2027 compliance deadline. This regulatory action comes in the wake of other proposals from the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, further solidifying the regulatory framework around stablecoins.

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