The US Treasury via FinCEN and OFAC released a joint proposed rule implementing key anti-money laundering (AML), countering the financing of terrorism (CFT), and sanctions provisions from the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), signed into law in 2025.
The proposal treats permitted payment stablecoin issuers (PPSIs) as financial institutions under the Bank Secrecy Act (BSA). It requires them to: Establish and maintain effective AML/CFT programs, including risk assessment, customer due diligence, suspicious activity reporting, and internal controls. Implement a sanctions compliance program.
Maintain technical capabilities, policies, and procedures to block, freeze, and reject specific transactions or funds that violate federal or state laws — including those involving sanctioned persons, countries, or other illicit activity. This applies not just at issuance but potentially to secondary market transactions as well.
The rule emphasizes that stablecoins must allow intervention when needed for compliance, while aiming for a tailored regime that supports innovation and minimizes unnecessary burdens. It promotes use of tools like blockchain analytics and APIs for monitoring. Public comments will be accepted before finalization.
This aligns with existing practices by major issuers, but it makes such capabilities a formal, ongoing obligation rather than voluntary or ad-hoc cooperation. Separately, the White House Council of Economic Advisers released an analysis on the same day (April 8) addressing the ongoing debate over stablecoin yield (interest-like rewards or returns paid to holders, often by exchanges or platforms holding stablecoins on behalf of users).
Banks have argued that allowing such yields via platforms like Coinbase could siphon deposits from the traditional banking system, reducing lending capacity—potentially by trillions in extreme scenarios—and harming community banks. The White House report pushes back, estimating that a ban on stablecoin yields and rewards would boost overall bank lending by only about $2.1 billion roughly 0.02% of total loans.
It concludes this would provide negligible protection to banks while forgoing consumer benefits from competitive returns. This analysis bolsters the crypto industry’s position in negotiations around follow-on legislation, such as the Clarity Act, where yield restrictions have been a sticking point. President Donald Trump has previously expressed support for the crypto side in this banks-vs.-crypto tension.
The GENIUS Act created the first comprehensive federal framework for payment stablecoins, including reserve requirements; 1:1 backing with safe assets, oversight; federal for larger issuers, with state options for smaller ones under substantially similar regimes, and now these compliance layers. Pro-compliance angle: Brings stablecoins more in line with traditional finance for illicit finance risks, potentially increasing legitimacy, institutional adoption, and national security alignment.
Critics of fully decentralized or unfreezable designs see this as necessary guardrails. The Treasury frames it as promoting American leadership in stablecoins while being fit for purpose. However, requirements for freezing capabilities could raise technical and decentralization concerns for some blockchain-native projects, as they necessitate issuer control over tokens post-issuance.
Highlights tensions between crypto; seeking competitive features like yields on stable holdings and banking incumbents. The White House study’s minimal-impact finding may ease passage of pro-yield provisions but won’t eliminate lobbying pushback. These are proposed rules open for comment, so details could shift. The GENIUS Act itself already included some AML/sanctions mandates, with this rulemaking fleshing them out.
Overall, the developments reflect a maturing US regulatory approach: layering traditional financial compliance onto stablecoins for risk management, while the administration appears pragmatic and somewhat pro-crypto on features like yields that could drive growth without major systemic harm to banks.
