US Regulators Propose New KYC Rules for Stablecoin Issuers

The US Federal Reserve, alongside other financial regulators, has proposed a mandatory Customer Identification Program (CIP) for payment stablecoin issuers, in a move designed to tighten oversight of the fast-growing sector. The proposal implements provisions of the GENIUS Act and is intended to strengthen efforts against money laundering, terrorist financing and other illicit digital asset activity. Following publication in the Federal Register on 22 June, the document is open for public comment for 60 days.

Under the plan, permitted payment stablecoin issuers would be treated as financial institutions for the purposes of the Bank Secrecy Act. That brings them within the same identity-verification expectations that already apply to banks and other regulated entities.

What issuers would need to do

The draft rules would require issuers to develop a written customer identification programme, verify the identity of each customer on a risk-based basis, retain the results of that verification, screen users against lists of individuals and organisations linked to terrorist activity, and put procedures in place for cases where a customer’s identity cannot be confirmed. Issuers would also be able to rely on the infrastructure of parent banks, or on checks carried out by other regulated financial institutions, provided the relevant AML and CFT controls are met.

Fed Vice Chair for Supervision Michael Barr said existing oversight mechanisms are not enough to counter illicit activity in the digital asset sector, warning that bad actors can too easily evade restrictions and operate undetected when transacting in digital assets.

The proposal is another step in building out the regulatory framework created by the GENIUS Act, which established rules for the US stablecoin market. For issuers, it signals that customer due diligence and sanctions screening will be central to operating a compliant payment stablecoin, rather than optional add-ons.

Shufti provides the Customer Identification Program building blocks stablecoin issuers need under the GENIUS Act, including document and biometric identity verification, sanctions and watchlist screening, and ongoing monitoring across 240+ countries and territories. Backed by a proprietary AI stack with no third-party dependencies and iBeta Level 3 certified liveness detection, the platform helps issuers meet Bank Secrecy Act expectations from day one. To see how Shufti supports a compliant CIP, request a demo.