The US Treasury Tightens Anti-Money Laundering Rules for Stablecoin Issuers

On April 8, 2026, the US Treasury reached a major milestone in stablecoin regulation. FinCEN and OFAC jointly published a proposed rule requiring payment stablecoin issuers to comply with the same anti-money laundering and sanctions standards as traditional banking institutions. This historic initiative profoundly reshapes the cryptocurrency market in the United States and marks a turning point in how US regulatory authorities approach decentralized finance.

This long-awaited proposal from the Department of the Treasury represents the first time such a comprehensive federal regulatory framework has been applied to payment-destined digital tokens. For years, stablecoins operated in a regulatory gray area, largely escaping the obligations that apply to traditional financial instruments. The new regulatory proposal radically changes this situation by aligning stablecoin issuer obligations with those of major financial institutions in the country.

Background

Since the GENIUS Act took effect in July 2025, the federal framework for payment stablecoins has been progressively put in place. This historic legislation established the first coordinated federal regime for payment tokens, restricting stablecoin issuance to approved entities known as permitted payment stablecoin issuers (PPSIs). The text aimed to clarify a regulatory landscape that had remained murky for years following the rise of cryptocurrencies during the previous decade.

Several regulatory attempts had failed in preceding years, blocked by politically sensitive considerations and opposition from powerful sector players. The GENIUS Act was ultimately passed by a wide margin in the US Senate, reflecting rare bipartisan consensus on the need to regulate stablecoins. The law was signed by the president in July 2025, marking the beginning of a new era for the digital payments industry in the United States.

Implementation details remained pending awaiting the implementing regulations. Market participants eagerly awaited clarification on specific issuer obligations. The Treasury’s new proposal fills this regulatory vacuum by treating PPSIs as financial institutions under the Bank Secrecy Act (BSA). This decision to subject them to the same rules as traditional banks represents a major paradigm shift for the sector.

This classification imposes obligations comparable to those of American banks. Issuers must now establish anti-money laundering compliance programs, conduct ongoing customer due diligence, report suspicious transactions, and designate a US-based compliance officer. This approach marks a radical change from the previous framework where obligations were often left to the discretion of market participants.

For the first time, federal law explicitly mandates a sanctions compliance program for a category of American persons. Previously, sanctions programs were recommended by authorities but never mandatory for this sector. This major evolution places stablecoin issuers on the same level as major financial institutions in terms of financial surveillance and cooperation with regulatory authorities.

The Facts

The proposed rule identifies three pathways to stablecoin issuance. The first concerns subsidiaries of insured depository institutions, which must obtain approval from their primary federal regulator. This option is intended for traditional banking institutions that wish to diversify their activities by offering their own stablecoins. They thus benefit from a clear framework to develop new products for their clientele. The second addresses qualified federal issuers, approved by the OCC. This pathway is open to companies that are not banks but would like to launch stablecoin issuance under federal supervision. The third targets qualified state issuers, under specific frameworks established by each US state regulator. Some states like Wyoming or New York have already established favorable regulatory frameworks for digital assets.

Reserve requirements remain strict and reflect authorities’ commitment to guaranteeing the stability of issued stablecoins. Each issuer must maintain one-for-one backing composed of US currencies, demand deposits in insured institutions, and short-term US Treasury bills. This conservative approach aims to guarantee that each issued stablecoin is effectively backed by real and liquid assets, eliminating the over-issuance risk that characterized some unregulated stablecoin offerings in the past.

The regulation clearly distinguishes the primary market from the secondary market, a fundamental distinction in understanding the new framework. The primary market corresponds to situations where the issuer interacts directly with the user during issuance or redemption of the stablecoin. It is within this framework that the strictest obligations regarding identity verification and transaction surveillance apply. The secondary market concerns transactions carried out via a smart contract, without direct issuer involvement in the exchange. Users can thus transfer stablecoins among themselves without the issuer being informed of each individual transaction.

On the primary market, PPSIs must report any suspicious transaction exceeding 5,000 US dollars. This reporting threshold, called SAR (Suspicious Activity Report) in regulatory jargon, represents an amount comparable to that applicable to traditional banks. It is significantly higher than the 2,000 dollar threshold in effect for Money Service Businesses. Issuers must also maintain sanctions compliance programs based on the OFAC 2019 framework, including senior management engagement, regular risk assessments, internal controls, periodic audits, and ongoing training programs for employees.

The text specifies that issuers must have the technical capability to block, freeze, and reject prohibited transactions, including on the secondary market. Blacklist and whitelist mechanisms are explicitly cited as examples of possible controls. Issuers must implement policies allowing them to freeze assets linked to sanctioned addresses and cooperate with judicial seizure orders.

Analysis

The 5,000 dollar threshold for SAR reporting is not trivial. It represents a significant political choice by American authorities. By aligning this threshold with that of traditional banks, the Treasury sends a clear signal: stablecoins must be considered mature financial instruments, comparable to traditional bank accounts rather than alternative money transfer services. This approach risks complicating the task of smaller issuers who must establish compliance programs similar to those of major banks.

The distinction between primary and secondary markets is crucial for understanding the scope of the text. While the primary market benefits from intense surveillance, the secondary market escapes the SAR reporting obligation. This decision reflects FinCEN’s finding that the majority of stablecoin money laundering occurs on the secondary market. However, imposing a general secondary market surveillance obligation could generate defensive reporting volume without real value for investigations. This is a delicate trade-off between financial surveillance and regulatory burden that authorities have chosen to resolve in favor of proportionality.

Mandatory risk assessments represent a major evolution in the American regulatory landscape. Unlike previous practices where risk assessments were largely voluntary for most financial institutions, PPSIs must now formally document their money laundering and terrorism financing risks. This risk-based approach resembles practices in effect at the largest international banks and should allow authorities to better target their supervision efforts on actors presenting the highest risks.

The question of extraterritorial application deserves particular attention. The proposed rule introduces changes to Chapters 31 of the Code of Federal Regulations that would affect foreign financial organizations involved in transactions linked to American sanctions. This extension of American jurisdiction could have significant implications for stablecoin issuers based abroad seeking to operate in the American market.

Implications for the DeFi Ecosystem

The impact of this regulation on the decentralized finance (DeFi) ecosystem remains a subject of intense debate. DeFi protocols that rely on stablecoins as a means of payment and store of value will need to adapt to this new framework. Smart contract developers could find themselves indirectly subject to compliance obligations if they interact with regulated stablecoin issuers.

Several major protocols have already begun integrating compliance mechanisms into their architectures. Emerging solutions such as compliance oracles allow smart contracts to automatically verify the regulatory status of addresses before executing certain transactions. This technical approach could become a de facto standard in the DeFi ecosystem.

Cross-chain bridges represent a particular friction point. These protocols allow transferring stablecoins between different blockchains and are often located in varying jurisdictions. American regulation could compel them to implement stricter controls on cross-border transactions.

Market Reactions

The cryptocurrency industry welcomes the regulatory clarity provided after years of legal uncertainty. Brian Armstrong, CEO of Coinbase, stated that the sector was working with several major American banks to integrate stablecoins into traditional financial infrastructures. He described this period as decisive for the future of decentralized finance in the United States, noting that regulatory clarity would finally allow traditional institutions to fully engage with the digital assets ecosystem.

On the banking side, traditional institutions express concern about what they consider unfair competitive advantage for stablecoin issuers. Banking lobby groups have carried out lobbying actions to further restrict rewards programs associated with stablecoins. They believe stablecoins represent a threat to their deposit-taking and lending business model.

Critics point to the text’s shortcomings regarding conflict of interest prevention. Senator Elizabeth Warren stated that the bill contained no effective provision to prevent the president and his family from profiting from their crypto operations, estimating gains at at least 1.4 billion dollars in the first year alone.

Outlook

With this proposal, the American Treasury lays the foundations for a stablecoin surveillance system comparable to that of traditional financial institutions. The financial crimes of organized crime cited in the document – money laundering, fraud, terrorism financing, sanctions evasion, and drug trafficking – attest to the magnitude of risks this regulation seeks to mitigate.

The comment period is open until June 9, 2026. Sector participants have two months to submit detailed observations. The text could be published before the end of the year, with an effective entry into force twelve months later to allow market participants time to adapt to the new requirements.

Until then, the Clarity Act could modify the overall regulatory landscape for the cryptocurrency sector. The bill, debated simultaneously in the Senate, provides for additional provisions on market structure and token classification. The Senate Banking Committee is scheduled to examine the Clarity Act on May 14, 2026.

Sources

• Stable Rules for Stablecoins: Treasury Proposes AML and Sanctions Framework for Issuers – Mayer Brown
• FinCEN and OFAC Propose AML/Sanctions Rules for Stablecoin Issuers Under GENIUS Act – Holland & Knight
• Permitted Payment Stablecoin Issuer Anti-Money Laundering/Countering the Financing of Terrorism – Federal Register
• Clarity Act Unveiled by U.S. Senate Banking Committee – CoinDesk
• U.S. Senate Banking Committee Moves to Advance Clarity Act Crypto Framework – Yahoo Finance