Stablecoin

United

Jerome Powell

Chair

Reserve

<p>The US Federal Reserve (Fed) has released a draft regulation that would require all cryptocurrency firms operating in the United States to verify the identities of stablecoin users. The proposal aims to clarify how anti-money laundering and know-your-customer (KYC) rules should apply to stablecoin services, targeting the risks of illicit finance and money laundering.</p>
<h2 id="new-compliance-obligations-for-stablecoin-firms">New compliance obligations for stablecoin firms</h2>
<p>The draft regulation was prepared in coordination with the Treasury Department, the Federal Deposit Insurance Corporation (FDIC), and other agencies from the Trump administration era. It interprets the application of customer identification provisions under the GENIUS Act, which entered into force last summer and established the first clear legal framework for stablecoins pegged to the US dollar.</p>
<p>According to the draft, all individuals and entities classified as “digital asset service providers” must take specific compliance measures. This designation covers US-based individuals and companies engaged in buying, selling, transferring, or custody of crypto assets. The rule would require these firms to implement additional checks to prevent stablecoin-related services from being exploited by criminal organizations or other illicit actors.</p>
<blockquote>
 <p>Under the Fed’s proposal, digital asset service providers must verify customers’ names, dates of birth, and addresses, and cross-check this information against government lists of terrorists and sanctioned parties.</p>
</blockquote>
<p>Accordingly, stablecoin service providers would be legally obligated to collect and verify key customer information, including name, date of birth, and address. These details must be checked against US government watchlists for terrorism and sanctioned groups to ensure regulatory compliance and minimize potential risks.</p>
<h2 id="a-divided-board-vote-draws-attention">A divided board vote draws attention</h2>
<p>Most members of the Fed’s Board of Governors voiced support for the draft regulation, according to public notes from the board. Former Fed Chair Jerome Powell was among those in favor. However, current Fed President Kevin Warsh chose to abstain in the vote on the proposal.</p>
<p>Warsh did not offer a statement explaining his abstention. A Fed spokesperson also declined to immediately comment when approached, raising further questions about which aspects of the proposal may have been debated internally.</p>
<h2 id="debate-over-the-decentralized-protocol-exemption">Debate over the decentralized protocol exemption</h2>
<p>The draft’s decision to exempt decentralized protocols from these identity obligations sparked criticism from some officials. This exemption appears not only in the proposed regulation but also in the GENIUS Act itself, leaving room for debate on the scope of oversight.</p>
<blockquote>
 <p>Fed Board Member Michael Barr, who supported publication of the proposal, stressed that the regulatory framework under the GENIUS Act may not be sufficient to address the illicit finance risks that arise from secondary market transactions involving payment stablecoins.</p>
</blockquote>
<p>Barr, recognized for his active commentary on financial regulation within the Fed’s leadership, endorsed the release of the draft but highlighted concerns that the current framework could fall short, especially in tackling illicit finance risks arising in secondary stablecoin markets.</p>
<h2 id="sixty-day-public-comment-period-begins">Sixty-day public comment period begins</h2>
<p>The Fed’s proposed rules will now enter a 60-day public comment period. During this window, industry representatives, legal experts, businesses, and other stakeholders can submit their feedback and suggestions for review. Any potential adjustments to the draft regulation will be determined after this consultation phase concludes.</p>
<p>The post <a href="https://en.coin-turk.com/fed-moves-to-mandate-identity-checks-for-all-us-stablecoin-users/" rel="noopener noreferrer nofollow">Fed moves to mandate identity checks for all US stablecoin users</a> appeared first on <a href="https://en.coin-turk.com" rel="noopener noreferrer nofollow">COINTURK NEWS</a>.</p>

Fed moves to mandate identity checks for all US stablecoin users

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