Summary
Treasury's FinCEN and OFAC are implementing the GENIUS Act with AML, sanctions, and customer-identification requirements for permitted payment stablecoin issuers (PPSIs). Issuers would be treated as financial institutions under the Bank Secrecy Act, needing risk-based compliance, customer due diligence, suspicious-activity reporting, and technical ability to block/freeze transactions. Critically, the customer-identification program is limited to direct (primary-market) customers of issuers, leaving roughly 99% of stablecoin activity — which occurs in the secondary market — outside issuer-level KYC.
Key Points
- FinCEN + OFAC proposed AML/sanctions/CIP for permitted payment stablecoin issuers (PPSIs)
- PPSIs treated as financial institutions under BSA
- April proposal (AML/CFT + sanctions): comment deadline June 9, 2026
- June proposal (customer identification): comments close Aug 21, 2026
- CIP limited to primary-market (direct) customers; ~99% of activity is secondary market
- CIP effective 12 months after final rule; costs: ~$83,660/yr (AML/CFT) + ~$33,000/yr (CIP) per issuer
- $5,000 suspicious transaction reporting threshold at/through issuer
- Existing issuers generally qualify as money transmitters / MSBs under BSA already
- US, UK (Travel Rule), EU (originator/beneficiary), Hong Kong (stablecoin licensing) moving same direction
- Mastercard's BVNK acquisition: ~$30B annualized stablecoin volume; Mastercard/Visa joined Open USD
- USDC ~70% of adjusted stablecoin volume H1 2026 vs ~25% USDT (Visa-adjusted)
- Banks push to prevent exchanges/affiliates offering yield-like rewards circumventing GENIUS Act ban on issuer-paid interest