US targets stablecoins with AML rules under new GENIUS Act push

The US Treasury Department has outlined how stablecoin issuers will be expected to monitor and control illicit finance risks under the GENIUS Act.

In a notice released Wednesday, the department said its Financial Crimes Enforcement Network and Office of Foreign Assets Control had jointly proposed rules that would bring payment stablecoin issuers into a formal compliance regime.

The proposal stems from provisions within the GENIUS Act, signed into law in July 2025, and forms part of a wider effort to translate the legislation into enforceable standards.

Under the proposal, stablecoin issuers would be required to establish anti-money laundering and counter terrorism financing programs, alongside dedicated sanctions compliance systems.

Firms must also build technical capabilities that allow them to “block, freeze, and reject” transactions that raise legal or regulatory concerns.

In practice, the framework places issuers within the same compliance perimeter as traditional financial institutions under the Bank Secrecy Act, requiring them to help authorities in detecting and preventing financial crime.

Further, each issuer would need to appoint a designated individual responsible for overseeing AML and CFT systems.

Eligibility is restricted to US-based individuals without prior convictions tied to financial misconduct, including insider trading, cybercrime, or fraud.

Treasury officials framed the proposal as an attempt to balance oversight with continued growth in the sector.

“President Trump is strengthening American leadership in digital financial technology. This proposal will protect the US financial system from national security threats without hindering American companies’ ability to forge ahead in the payment stablecoin ecosystem,” Treasury Secretary Scott Bessent said.

The proposal also leaves some room for flexibility in enforcement.

FinCEN noted it “generally would not take an enforcement action” against issuers that have already implemented adequate compliance procedures, a stance that signals a degree of regulatory forbearance as firms adapt to the new framework.

Public comments on the rule will be accepted over a 60-day period.

Regulators gear up for GENIUS Act rollout

Wednesday’s proposal builds on earlier steps taken under the GENIUS Act, which introduced a structured regime for stablecoin issuance in the United States.

The law is set to come into force 18 months after its signing, or 120 days after supporting regulations are finalised.

Last week, the Treasury outlined how stablecoin oversight would be split between federal and state regulators, allowing smaller issuers to operate under state regimes if they meet “substantially similar” standards.

FinCEN and OFAC are the latest agencies to outline proposals tied to the GENIUS Act’s rollout.

A day earlier, the Federal Deposit Insurance Corporation introduced its own framework, while the Office of the Comptroller of the Currency had already issued guidance in February.

The FDIC clarified that stablecoin holders would not be covered by deposit insurance, though reserves backing those tokens would remain protected.