Treasury Proposes Stablecoin AML Rules Under GENIUS Act
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- U.S. Treasury proposed a rule requiring stablecoin issuers to build anti-money laundering and sanctions programs under the GENIUS Act, with the proposal drafted by FinCEN and OFAC and opened for 60 days of public comment
- The rule formally classifies stablecoin issuers as "financial institutions" under the Bank Secrecy Act, bringing them under the same AML oversight umbrella FinCEN and OFAC already apply to other entities
- Issuers must design tokens that allow transactions to be blocked, frozen, or rejected for law-violating activity, and must comply with lawful orders
- Stablecoin issuers must appoint a U.S.-based compliance officer, and individuals convicted of insider trading, cybercrime, or financial fraud are barred from the role
- FinCEN "generally would not take an enforcement action" against issuers that maintain adequate procedures — a de facto safe harbor for compliant operators
- FDIC rolled out its own GENIUS Act implementation proposal on Tuesday, with Moody's Warren Kornfeld noting it extends beyond stablecoins to tokenized deposits in the banking sector, following the OCC's February proposal
Why it matters: Treasury's rule is the third agency GENIUS Act implementation in a week (after the OCC in February and the FDIC on Tuesday), and it locks stablecoin issuers into the same Bank Secrecy Act compliance regime as banks — including token-level kill switches and U.S.-resident compliance officers. The 60-day comment window and FinCEN's enforcement safe harbor give compliant issuers a clear runway, while the operational requirements raise the barrier for smaller or foreign-domiciled players.
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