Whalesbook
Treasury Details New Stablecoin Rules
The Treasury's Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) are setting out detailed rules for stablecoin firms. These measures will require companies to build systems capable of blocking, freezing, and rejecting suspicious transactions. This aligns with the Bank Secrecy Act, a core part of the U.S. financial system.
Implementing the GENIUS Act
This proposal implements last year's Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, the first significant crypto-sector law in the U.S. FinCEN and OFAC, which focus on tackling illicit finance, are developing specific rules for stablecoin firms. The proposed regulations will go through a public comment period before they are finalized. Agencies acknowledge industry expertise, recognizing that financial institutions are best placed to identify and manage risks.
Combating Illicit Finance
The Treasury Department's plan indicates that firms with suitable anti-money-laundering (AML) programs will generally be protected from enforcement action unless major system-wide failures occur. FinCEN expects issuers' AML programs to stop flagged transactions and focus more resources on higher-risk customers. Companies issuing stablecoins would also need to check records for any activity linked to individuals or entities flagged by FinCEN, aiding in the pursuit of money laundering concerns.
Sanctions and Industry Response
Regarding sanctions, OFAC will require risk-based protections for stablecoin activities globally, including policies to detect and reject transactions that break U.S. sanctions. Treasury Secretary Scott Bessent stated these efforts "will protect the U.S. financial system from national security threats without hindering American companies' ability to innovate in the payment stablecoin sector." Industry leaders have been waiting for this regulatory clarity to make their assets safe and reliable.
Regulatory Horizon
The GENIUS Act is expected to be fully effective by 2027. Other regulators, including the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp., are also defining their oversight roles. These proposed rules, along with ongoing industry discussions, are shaping the evolving framework for digital assets.