US Regulators Propose GENIUS Act Stablecoin Customer ID Rules for AML and CFT

US regulators including the Federal Deposit Insurance Corporation, Federal Reserve, Office of the Comptroller of the Currency, National Credit Union Administration and the US Treasury’s Financial Crimes Enforcement Network proposed stablecoin rules that would treat permitted payment stablecoin issuers as regulated financial institutions for user identity verification.

The proposed rule is tied to the Guiding and Establishing National Innovation for US Stablecoins ($GENIUS) Act signed into law in July 2025, and it would be open to public comment for 60 days after it is officially filed in the US Federal Register on Monday.

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The proposal is intended to address Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) requirements for stablecoin providers through $GENIUS, using Bank Secrecy Act minimum standards such as “verifying the identity of any person seeking to open an account.”

In a separate but related GENIUS implementation step, the Federal Reserve’s notice of proposed rulemaking would require PPSIs to establish formal customer identification programs, with Jerome Powell backing the move and incoming chair Kevin Warsh abstaining.

Under the Fed’s proposed framework, PPSIs would need to build out customer identification programs, commonly known as CIPs, and the GENIUS Act also requires PPSIs to hold reserves in high-quality liquid assets on a strict 1:1 basis.

The proposal also includes a restriction that PPSIs are prohibited from offering interest or yield to token holders, while the Fed’s approach is paired with joint proposals from Treasury, FinCEN, and OFAC targeting AML and sanctions compliance for stablecoin operations.

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The American Banker described the joint proposal as implementing GENIUS Act directives to treat PPSIs as financial institutions for purposes of the Bank Secrecy Act and to require an “effective customer identification program, including identification and verification of account holders.”

That same American Banker account says the proposal would require issuers to identify customers only in the primary market, with issuers not required to identify those who later transact in tokens on the secondary market.

Federal Reserve Governor Michael S. Barr said he supports the issuance of the proposal but remains concerned that “the GENIUS Act regulatory framework does not do enough so far to address the risks of illicit finance conducted through secondary market transactions in payment stablecoins.”

Barr said he will “carefully review comments in response to the proposal’s questions regarding whether any portions of the CIP [customer identification program] rule should be extended to secondary market activity,” framing the issue as whether customer-ID obligations should reach beyond primary-market relationships.

The PYMNTS account of the joint proposal says it would require the customer identification program to include risk-based procedures for verifying identity, maintaining records, and determining whether a customer appears on government lists of known or suspected terrorists or terrorist organizations.

PYMNTS also quoted NCUA Chairman Kyle Hauptman saying the joint proposed rule “sets clear standards for identifying and verifying account holders and safeguards the interests credit unions and their members,” tying the customer-ID requirements to preventing money laundering and terrorist financing.