NPRM: Permitted Payment Stablecoin Issuer AML/CFT program and sanctions compliance program requirements (91 FR 18582) (Part 4 of 8)
Document text
Research, not advice. Part of the Bitcoin research archive (October 2026). Claims labelled unverified, contested or fringe are reported, not endorsed; statuses of bills and rules are as of the date checked. Government, court and patent records are public domain; the research notes are CC BY 4.0.
a system of risk-based internal
actions to address and mitigate assessments should be holistic
sanctions risks for the entire controls—including technical
reviews—for instance, evaluating a capabilities and written policies and
organization, which is critical to the PPSI’s touchpoints with external parties
integrity of the PPSI’s compliance procedures—applicable to all payment
and jurisdictions, including customers,
functions. The sanctions compliance vendors, and intermediaries, in order to 295 See, e.g., OFAC, Key Holding, LLC Settles with
program must be able to act efficiently identify direct and indirect sources of OFAC for $608,825 Related to Apparent Violations
and effectively within the organization sanctions risk—OFAC does not propose of Cuban Assets Control Regulations (July 2, 2025)
to be able to respond to timely a uniform criteria for a holistic review, [hereinafter Key Holding], available at https://
sanctions-related developments. ofac.treasury.gov/media/934456/download?inline.
again recognizing the GENIUS Act’s 296 See Virtual Currency Industry Guidance,
lotter on DSK8BHNXB4PROD with PROPOSALS3
Accordingly, the proposed rule would tailoring requirement.294 supra note 286, at p. 11.
require, as a key element, that senior Use of risk assessment results to 297 The PPSI as an entity would be required to
management ensure that the sanctions develop and revise a sanctions establish and maintain the internal controls as part
compliance program is able to manage compliance program ensures a program of the compliance program, which senior
effectively U.S. sanctions risks for the management would be required to review and
approve as part of reviewing and approving the
entire organization. 292 See 12 U.S.C. 5903(a)(5)(B).
compliance program writ large. See supra section
Critically, senior management’s active 293 Id.
VII.B.1 for discussion of the role of senior
support for the five requirements 294 Id. management.
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18617
stablecoin-related activity, whether on Furthermore, PPSIs should generate and procedures because they ensure that
the primary or secondary market, that maintain records pertaining to activity compliance measures (like screening the
identifies, blocks, and/or rejects that may be prohibited by OFAC as part SDN List) are applied consistently
transactions that may violate or would of their internal controls regime. OFAC across an entire organization, preventing
violate U.S. sanctions and retains has imposed penalties on entities not fragmented, decentralized, or ad-hoc
relevant records in accordance with solely because prohibited transactions practices that can lead to sanctions
OFAC regulations. OFAC assesses that a occurred, but because organizations violations.303 OFAC has finalized
dynamic internal controls system that failed to maintain complete records or numerous civil monetary penalties or
adapts to new regulatory and risk- submit timely reports.301 settlements since publishing the 2019
related developments is critical to As described, proposed Compliance Framework in which an
fulfilling key obligations imposed under § 502.201(b)(3) would also mandate that organization’s decentralized compliance
the GENIUS Act. the PPSI continually update the function was one of the root causes of
First, the technical components of a technical internal controls (including the sanctions violations identified
PPSI’s internal control system are risk-based sanctions screening), which during the course of the investigation.
paramount. In particular, the GENIUS ensures the internal controls effectively Written policies and procedures can
Act requires that a PPSI must be able to address amended or updated U.S. clearly define the roles and
‘‘block, freeze, and reject specific or sanctions authorities and applicable responsibilities of compliance staff,
impermissible transactions that violate U.S. sanctions risks. Given the dynamic ensuring accountability and proper
Federal or State laws, rules, or nature of OFAC sanctions, internal oversight. Written policies also ensure
regulations,’’ 298 which includes controls should be capable of adjusting that compliance protocols are
transactions that violate or would rapidly to new OFAC designations, communicated to all relevant
violate U.S. sanctions regulations. prohibitions, requirements, and stakeholders, minimizing inadvertent
Although PPSIs are generally neither the guidance, and of effectively identifying violations caused by misunderstanding
originator nor the beneficiary of risk exposure that may warrant or lack of training. Proposed
transactions, other than issuing or heightened due diligence.302 Relevant § 502.201(b)(3) also stipulates that such
redeeming a payment stablecoin, the guidance may, as noted in the proposed internal control documents must be
GENIUS Act makes clear that a PPSI is rule, include risks identified in routinely reviewed and revised such
nonetheless obligated to block and reject advisories, alerts, or notices issued by that there is timely and appropriate
impermissible transactions—including the Department of the Treasury or other action to remediate any identified
on the secondary market—involving a relevant U.S. government agencies. compliance gaps or deficiencies. The
payment stablecoin it has issued. The These reports often enumerate specific process of routinely reviewing and
proposed rule’s requirement that each red flags and typologies indicative of revising written policies and procedures
PPSI establish and maintain technical sanctions evasion trends. PPSIs should should incorporate frequent testing of
capabilities to block or reject any consider using such information, along technical internal controls to ensure
payment stablecoin-related activity that with other open source and proprietary effectiveness and sufficiency. If and
violates or would violate U.S. sanctions information, in order to conduct when a PPSI identifies a weakness in its
directly tracks the GENIUS Act’s proactive diligence to identify and internal controls system, the PPSI
mandate that PPSIs maintain such mitigate potential sanctions risks. should take immediate and effective
technical control over impermissible Information obtained by a PPSI for action, to the extent possible, to identify
transactions that violate Federal laws, purposes of complying with the BSA and implement compensating controls
including sanctions regulations. may also be relevant in identifying and until the root cause of the weakness can
In practical terms, PPSIs should mitigating sanctions risks. By be determined and remediated.
implement risk-based sanctions controls Finally, OFAC notes that the exact
establishing and maintaining technical
on transactions, including on the form of internal controls is not
internal control mechanisms, including
secondary market, to satisfy this prescribed by this proposed rule. In
the ability to effectively identify sources
requirement. OFAC’s Virtual Currency keeping with the GENIUS Act’s
of sanctions risk, PPSIs are able to
Industry Guidance provides examples of requirement to tailor rules to the size
maintain the technical capacity
best practices of internal controls, and complexity of each PPSI’s
necessary to comply with OFAC’s
including with respect to transaction operations,304 OFAC does not propose a
blocking and non-blocking sanctions uniform or ‘‘one-size-fits-all’’ internal
monitoring and sanctions screening, for programs.
digital asset participants, which will control system. Rather, the specific
Second, the written policies and internal control system should be risk-
likely be relevant for PPSIs.299 For procedures requirement of proposed
example, at a minimum, such sanctions based and will depend, among other
§ 502.201(b)(3) prescribes that the risk- things, on the PPSI’s products, services,
screening should include tools based internal controls established by
sufficient to identify and block geographical scope of operations, direct
the PPSI are documented in writing and customers, end users or holders, and on
transactions associated with digital are clearly communicated to all relevant
currency addresses included on OFAC’s the sanctions risks the PPSI identifies
personnel and stakeholders (e.g., clients, during its risk assessment process or
SDN List.300 In addition, the technical business partners, counterparties).
internal controls should enable the PPSI through any other measures.
OFAC is proposing written policies and PPSIs may consider using a variety of
to clearly and effectively identify,
interdict, escalate, and report (as 301 See, e.g., OFAC, OFAC Imposes $7,139,305
tools to develop and implement internal
lotter on DSK8BHNXB4PROD with PROPOSALS3
necessary and appropriate) activity that Penalty on Gracetown, Inc. for Violating Ukraine- controls, including external resources.
may be prohibited by the regulations /Russia-Related Sanctions and Reporting In the financial industry, internal
and laws administered by OFAC. Obligations (Dec. 4, 2025), available at https:// controls often include software for
ofac.treasury.gov/media/934796/download?inline. sanctions screening, investigations,
302 See, e.g., OFAC, OFAC Settles with Toll
298 12 U.S.C. 5903(a)(5)(A)(iv).
Holdings Limited for $6,131,855 Related to
transaction monitoring, and other
299 See Virtual Currency Industry Guidance,
Apparent Violations of Multiple Sanctions
supra note 286, at pp. 13–17. 303 See, e.g., Key Holding, supra note 295.
Programs (Apr. 25, 2022), available at https://
300 See id. at p. 15. ofac.treasury.gov/media/922441/download?inline=. 304 12 U.S.C. 5903(a)(5)(B).
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00037 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
18618 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
purposes. For digital assets industry internal audits may be effective and may that is: (i) performed at least annually
participants in particular, these tools be a reasonable part of a compliance and with a frequency appropriate to the
typically function as a linchpin of the program, depending on a PPSI’s PPSI’s risk assessments and risk profile;
organization’s internal controls. OFAC individualized risk profile. However, (ii) provided to all relevant personnel
does not require PPSIs to use any OFAC’s experience administering and and stakeholders; (iii) appropriately
specific tool or software, and OFAC’s enforcing U.S. sanctions has also shown tailored to each trainee’s role and
engagement with the private sector has that internal audits can lack the responsibilities; (iv) modified to reflect
found that the specific tools employed independence, expertise, and resources risk assessments findings and identified
vary widely by industry. Digital assets to conduct objective and thorough deficiencies in the sanctions compliance
industry participants routinely report evaluations of an entity’s own program, including testing and audit
using blockchain analysis, open-source compliance efforts, while external findings; and (v) designed to include
intelligence, geolocation tools, and audits often provide more effective and easily accessible resources and materials
media monitoring tools, among other comprehensive assessments. for all relevant personnel and
solutions, whether developed internally Routine, comprehensive, stakeholders. Based on OFAC’s
or sourced from a vendor. OFAC’s independent, and objective testing or experience investigating and enforcing
Virtual Currency Industry Guidance auditing of a sanctions compliance sanctions violations and providing
provides other examples of internal program is essential to the program’s compliance guidance to private
controls best practices that PPSIs may continued effectiveness.306 OFAC has industry, OFAC has found the
consider adopting.305 Whether a PPSI observed cases of apparent violations establishment and maintenance of a
uses these or other tools will depend on resulting from compliance, testing, or risk-based sanctions compliance
specifics of each PPSIs operations. audit software that was improperly training program to be critical to
Ultimately, the internal controls configured, deactivated, or modified ensuring that the benefits and expertise
required by the proposed rule will allow over time, including following updates, cultivated by the PPSI’s compliance
PPSIs to comply with the numerous changes, or the deployment of new efforts are shared across an organization
other mandates in the GENIUS Act. technology by the broader organization. and not limited to compliance program
Human error and lack of attention to personnel and senior management.308
4. Proposed 31 CFR 502.201(b)(4)—
changes in testing and audit results can In keeping with the GENIUS Act’s
Testing and Auditing
compound these issues as can the speed requirement to tailor rules to the size
Proposed § 502.201(b)(4) would and volume of payment stablecoin- and complexity of each PPSI’s
require that a PPSI establish and related activity that PPSIs and other operations,309 OFAC proposes PPSI
maintain an independent testing or digital assets industry participants may discretion in setting a training cadence
audit function, accountable to senior face. that aligns with a PPSI’s particular
management, with sufficient resources, Again, in line with the GENIUS Act’s circumstances, provided a PPSI meets
expertise, and authority to identify U.S. requirement to tailor rules to the size the minimum of an annual training.
sanctions compliance-related and complexity of each PPSI’s Based on industry practice, OFAC views
weaknesses and deficiencies. In operations,307 proposed § 502.201(b)(4) annual training as an appropriate
addition, each PPSI would also have to does not specify the precise contours of minimum, recognizing that certain
ensure that qualified personnel what the testing and audit function PPSIs may determine, based on their
routinely perform comprehensive, should include. However, based on the assessment of risk, that more frequent
independent, and objective testing or existing 2019 Compliance Framework, trainings may be necessary, either for all
auditing of the effectiveness of the PPSIs should be prepared to implement or certain personnel and stakeholders,
sanctions compliance program and its a testing and audit function that can including after a knowing or material
functions. And finally, the proposed identify weaknesses and deficiencies in violation of the GENIUS Act has
rule would require that such testing and their sanctions compliance, including in occurred or an apparent violation of
auditing results are used to identify and products or services still under U.S. sanctions, to understand root
implement any needed updates or development. In addition, based on the causes and avoid repeated issues.
enhancements to the sanctions existing 2019 Compliance Framework, a OFAC proposes training be provided
compliance program, and that PPSIs testing and auditing program should be to all relevant personnel and
maintain and provide to OFAC upon tailored to address the sanctions risks stakeholders 310 to support the type of
request records of any such testing and accompanying the PPSI’s operations, comprehensive risk assessments and
auditing results and enhancements. and results should be used to testing and auditing that an effective
An independent testing or audit implement updates, remediate sanctions compliance program requires.
function can be either external or compliance gaps, and make the PPSI Broad awareness of an organization’s
internal to a PPSI. If internal, controls aware of how its products and services sanctions compliance obligations,
must be in place to ensure audits or are performing against the sanctions policies, and available tools is necessary
testing are sufficiently independent. compliance program’s internal control to identify and surface information
Criteria relevant to establish benchmarks. regarding potential sanctions risks and
‘‘independence’’ may vary based on a to support timely action to address
5. Proposed 31 CFR 502.201(b)(5)—
range of factors, including a PPSI’s those risks. Based on OFAC’s
Training
internal corporate structure, the internal
auditor’s accountability to senior Proposed § 502.201(b)(5) would 308 See, e.g., OFAC, OFAC Settles with 3M
Company for $9,618,477 Related to Apparent
lotter on DSK8BHNXB4PROD with PROPOSALS3
leadership and or the PPSI’s board of require a PPSI establish and maintain a
Violations of the Iranian Transactions and
directors, as well as the training and risk-based compliance training program Sanctions Regulations (Sept. 21, 2023), available at
expertise possessed by the internal https://ofac.treasury.gov/media/932161/
306 See, e.g., OFAC, OFAC Enters Into download?inline.
auditor. With the appropriate $1,385,901.40 Settlement with Payoneer Inc. for 309 12 U.S.C. 5903(a)(5)(B).
independence, expertise, and resources, Apparent Violations of Multiple Sanctions 310 Relevant stakeholders can include clients,
Programs (Jul. 23, 2021), available at https:// suppliers, business partners, and counterparties.
305 See generally Virtual Currency Industry ofac.treasury.gov/media/911571/download?inline. 2019 Compliance Framework, supra note 285, at p.
Guidance, supra note 286. 307 12 U.S.C. 5903(a)(5)(B). 7.
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00038 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18619
experience engaging with private sector explanations of the terms described the issuance of payment stablecoins or
entities of various sizes and sanctions above. in the trading thereof.
risk profiles, a ‘‘one-size-fits-all’’
1. Proposed 31 CFR 502.301— 3. Proposed 31 CFR 502.304—Permitted
training requirement would both be less
Knowingly Payment Stablecoin Issuer; PPSI
effective and run counter to the
principle of supporting private actors to Consistent with the GENIUS Act, OFAC proposes to define the term
make their own circumstance-based ‘‘permitted payment stablecoin issuer’’
OFAC’s proposed rule provides for civil
prioritizations in furtherance of or ‘‘PPSI’’ consistent with the definition
monetary penalties, including penalties
compliance. Furthermore, the provided in the GENIUS Act.314 To
for each day during which a PPSI
requirement that training-related ensure the definition of ‘‘permitted
knowingly violates the GENIUS Act’s
resources and materials be made easily payment stablecoin issuer’’ accurately
requirement that PPSI’s maintain an
available to all relevant personnel and applies only to ‘‘persons’’ as defined in
stakeholders likewise supports the effective sanctions program.311 the GENIUS Act, rather than ‘‘person’’
essential flow of information and a well- However, the GENIUS Act does not as defined differently in other
trained workforce. Employees or define the term ‘‘knowingly.’’ Under the regulations administrated by OFAC,
stakeholders with insufficient or proposed rule, OFAC defines OFAC is replacing the word ‘‘person’’
inaccessible training may overlook or ‘‘knowingly’’ with respect to conduct, a with ‘‘individual, partnership,
fail to understand the significance of circumstance, or a result, as meaning company, corporation, association,
relevant information at key junctures, that a person has actual knowledge, or trust, estate, cooperative organization, or
causing sanctions violations to go should have known, of the conduct, the other business entity, incorporated or
unnoticed, while properly trained circumstance, or the result. OFAC is unincorporated,’’ which is how
employees will be equipped to spot red proposing this definition because it is ‘‘person’’ is defined in the GENIUS
flags and identify sanctions risk in real consistent with how OFAC defines that Act.315
time. term across multiple sanctions programs
Finally, the proposed requirement and will be familiar to the sanctions D. Proposed 31 CFR 502.401 and
that organizations modify training compliance community.312 502.402—Penalties
programs to reflect findings of risk Proposed § 502.401(a) would impose
assessments and identified deficiencies 2. Proposed 31 CFR 502.303—Payment
civil monetary penalties of not more
in their sanctions compliance program Stablecoin-Related Activity
than $100,000 per day for PPSIs that
is essential to keeping trainings current OFAC proposes to define ‘‘payment materially violate the requirement to
and effective. Training programs that do stablecoin-related activity’’ to include maintain an effective sanctions
not incorporate new information and compliance program. Proposed
issuing, trading, holding, transacting,
corrections to past deficiencies are § 502.401(b) would provide for an
transferring, redeeming, or any other
inherently less effective than training additional $100,000 penalty for each
activity involving a payment stablecoin
programs that account for such day during which a PPSI knowingly
developments. issued by a PPSI from the time of
issuance until the payment stablecoin’s participates in a violation of the same.
C. Definitions removal from circulation, whether on If a PPSI does not pay the penalty
the primary or secondary market, imposed pursuant to § 502.401,
OFAC is proposing to define four proposed § 502.402 authorizes OFAC to
terms in the definitions section of the including through redemption or by any
other means. OFAC intends to interpret refer the matter for administrative
new 31 CFR part 502. OFAC proposes collection measures by the Department
to define two terms—‘‘knowingly’’ and the term ‘‘payment stablecoin’’
of the Treasury or to the Department of
‘‘OFAC’’—at § 502.301 and § 502.302, consistent with how that term is defined
Justice for appropriate action to recover
respectively, consistent with other in the GENIUS Act.313 As discussed in
the penalty in a civil suit in a federal
OFAC regulations. OFAC proposes to section V.B above, there are a variety of
district court.
define ‘‘payment stablecoin-related scenarios under which PPSIs may be
The proposed penalties are consistent
activity’’ at § 502.303 to capture the required to block or reject transactions
with those prescribed in the GENIUS
range of activities involving a PPSI’s under U.S. sanctions, whether on the
Act, which provides for a civil penalty
payment stablecoin from the time of primary or secondary market. For of not more than $100,000 for each day
issuance until the payment stablecoin’s example, a PPSI is prohibited from during which a PPSI materially violates
removal from circulation, including issuing payment stablecoins to a any regulation issued under the GENIUS
activity on the secondary market, and to blocked person and from allowing Act and an additional penalty of not
future-proof the regulations. Finally, blocked persons to engage with its smart more than $100,000 per day during
OFAC proposes to define the term contracts to facilitate trades of its which a PPSI knowingly violates any
‘‘permitted payment stablecoin issuer’’ payment stablecoins. Accordingly, regulation issued under the GENIUS
at § 502.304 consistent with the OFAC’s proposed definition ensures Act.316 Additionally, the penalties are
definition of that term contained in the that a PPSI’s sanctions compliance consistent with those permitted under
GENIUS Act, with slight modifications obligations apply to all activity IEEPA, which allows for the imposition
to reconcile differences between how involving its payment stablecoins, of civil penalties of the greater of
the GENIUS Act defines the term whether on the primary or secondary $377,700 or twice the amount of the
‘‘person’’ and how that term is defined market. OFAC’s proposed definition is underlying transaction for each
lotter on DSK8BHNXB4PROD with PROPOSALS3
in OFAC’s regulations, as well as to also appropriately scoped to ensure that violation,317 as well as the Trading with
synthesize definitions contained within the proposed rule captures future
the GENIUS Act for ease of technological developments, whether in 314 See 12 U.S.C. 5901(23).
understanding by the regulated public. 315 See 12 U.S.C. 5901(24).
With the exception of the term 311 12 U.S.C. 5905(b)(5)(B). 316 See 12 U.S.C. 5905(b)(5)(B)–(C).
‘‘OFAC,’’ which simply refers to the 312 See, e.g., 31 CFR 561.314, 566.312, 589.322, 317 See 50 U.S.C. 1705(b), as adjusted pursuant to
‘‘Office of Foreign Assets Control,’’ 594.321. the Federal Civil Penalties Inflation Adjustment Act
OFAC below provides additional 313 See 12 U.S.C. 5901(22). of 1990 (28 U.S.C. 2461 note).
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00039 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
18620 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
the Enemy Act (TWEA), the sanctions of an insured depository institution Should FinCEN add anything to further
authority that underpins OFAC’s Cuba subject to a parallel regulation? define these terms in the final rule?
sanctions program, which allows OFAC 4. Should FinCEN carve PPSIs out of 12. What, if any, difficulties do PPSIs
to impose penalties of up to $111,308 the MSB definition? Are there anticipate when incorporating the AML/
for each violation.318 circumstances in which an entity could CFT Priorities as part of their risk
reasonably be uncertain whether it assessment processes?
VIII. Final Rule Effective Dates 13. Should risk assessment processes
should be treated as a PPSI or as an MSB
FinCEN and OFAC are proposing that under the proposed definitions? If so, be required to take into account
their respective rules will become please describe. additional or different criteria or risks
effective 12 months after issuance of than those listed in the proposed rule?
final rules to allow sufficient time for B. Questions on Proposed Definitions If so, what additional factors should
PPSIs to review and implement the 5. Are FinCEN’s proposed definitions FinCEN consider requiring?
requirements of the proposed rule. We sufficiently clear? Should the 14. What risk factors should PPSIs
seek comment on the proposed effective definitions be expanded or narrowed in consider when conducting risk
date. any respect? Should FinCEN define assessments under the proposed rule,
additional terms or amend additional including customer, product,
IX. AML/CFT Request for Comment transaction, geographic, and
existing terms?
FinCEN seeks comments on all technological risks?
6. Are there products or arrangements 15. Is additional explanation needed
aspects of the proposed rule and that may fall near the boundary of the
specifically seeks comments on the concerning when a PPSI would be
proposed definition of payment required to update its risk assessment?
following topics. For all responses, stablecoin, and if so, how should
commenters are encouraged to provide In particular, how might FinCEN clarify
FinCEN address such cases? how risk assessment processes would be
the basis for any conclusions drawn in
7. Is FinCEN’s proposed definition of updated ‘‘promptly’’? Would an
their comments. FinCEN is also
‘‘lawful order’’ sufficiently clear? alternative approach, such as periodic
requesting commenters consider
Should FinCEN further define any terms updates or a set schedule for updates, be
whether any obligation can be better
within ‘‘lawful order’’? Should FinCEN, preferable? Would an alternative
tailored to the size and complexity of an
for example, specify that ‘‘accounts’’ for standard, such as ‘‘materially changes,’’
issuer and how such tailoring would
purposes of lawful orders include any be clearer than ‘‘significantly changes’’?
impact burden and risk of illicit finance.
number or identifier used to identify a 16. To what extent do the proposed
A. Questions on PPSI Relationships to holder of a payment stablecoin, AML/CFT program requirements
Other Types of Financial Institutions including a wallet address? provide sufficient flexibility for PPSIs to
1. Where PPSIs are subsidiaries of C. Questions on Proposed AML/CFT design programs that are appropriately
insured depository institutions, do any Program risk-based and tailored to their size,
of FinCEN’s proposals for PPSIs present complexity, and business models?
legal challenges or substantial 8. In what respects should a PPSI’s 17. To what extent should PPSIs
operational challenges such that AML/CFT program account for risks on consider information about secondary
implementation would be practically the secondary market? market transactions as part of their
impossible? How can FinCEN’s 9. The proposed rule sets forth the customer due diligence processes?
regulatory infrastructure promote an conditions for an effective AML/CFT 18. Should FinCEN further clarify
efficient and effective BSA regime program. Is the description of an which specific elements of an
where a PPSI and its parent may be effective program sufficiently clear or is institution’s AML/CFT program must be
subject to similar or overlapping there anything further that FinCEN written? Should FinCEN instead
obligations? should consider adding in the final rule eliminate the requirement that an AML/
2. Where PPSIs are also uninsured to clarify program effectiveness? CFT program be expressly required to be
national banks, do any of FinCEN’s 10. The proposed rule reflects a ‘‘written’’ because, among other reasons,
proposals present legal challenges or determination by FinCEN that PPSIs are financial institutions may be subject to
substantial operational challenges such best placed to identify risks and allocate other applicable recordkeeping and
that implementation would be resources, and that providing them with documentation requirements? What
practically impossible? How can greater discretion in these areas will would be the benefits or drawbacks of
FinCEN’s regulatory infrastructure improve the quality of AML/CFT not prescribing a mandatory written
promote an efficient and effective BSA compliance and reporting to law requirement in the regulation?
regime where a PPSI may be subject to enforcement. Is this correct or should 19. The proposed rule would require
similar or overlapping obligations as FinCEN consider adding more that a PPSI’s written AML/CFT program
both a PPSI and an uninsured national requirements regarding allocation of be approved by its board of directors, an
bank? Should FinCEN carve out PPSIs resources? How might PPSIs assess equivalent governing body, or
from rules that apply to banks for some changes in the total allocation of appropriate senior management. Should
or all obligations? resources devoted to an AML/CFT FinCEN further clarify which aspects of
3. What would be the benefits and program in a changing risk and cost the AML/CFT program must be subject
drawbacks of FinCEN extending the environment? to such approval? In particular: (a)
logic of its 2012 administrative 11. Should the proposed rule’s should approval be required for each of
lotter on DSK8BHNXB4PROD with PROPOSALS3
ruling 319 to PPSIs that are a subsidiary distinction between ‘‘establishing’’ and the core program components, or would
‘‘maintaining’’ a program be modified? approval of the overall program
318 See 50 U.S.C. 4315(b)(1), as adjusted pursuant Is the distinction between framework be sufficient; (b) should
to the Federal Civil Penalties Inflation Adjustment ‘‘establishing’’ and ‘‘maintaining’’ a material revisions to particular
Act of 1990 (28 U.S.C. 2461 note). components (such as significant changes
319 FinCEN, FIN–2012–R005, Compliance
compliance program useful for PPSIs?
Obligations of Certain Loan or Finance Company
to the institution’s risk assessment
Subsidiaries of Federally Regulated Banks and available at https://www.fincen.gov/system/files/ methodology, monitoring architecture,
Other Financial Institutions (Aug. 13, 2012), administrative_ruling/FIN-2012-R005.pdf. or governance structure) require re-
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00040 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18621
approval at the same level; and (c) what process and prevent logistical burdens 36. Are there particular types of
level of specificity should the approving for PPSIs or delays in exam report payment stablecoin transactions or
body be required to review and approve issuance? activities for which additional
(e.g., high-level program architecture 26. FinCEN welcomes comment on clarification regarding SAR reporting
versus detailed procedures or how the Director of FinCEN may obligations would be beneficial?
parameter-level settings)? Should consider the performance of innovative 37. Should the proposed regulatory
FinCEN instead eliminate the specified activities that produce demonstrable text be modified to clarify joint SAR-
approval requirement, allowing PPSIs outputs under the proposed supervision filing and SAR sharing when a PPSI is
flexibility in determining how and enforcement framework. a subsidiary of a parent depository
leadership oversight of the AML/CFT institution? Are other clarifications or
D. Questions on Proposed Additional
program is structured? What would be modifications needed with regards to
the benefits or drawbacks of not Technical Capabilities
SAR sharing?
prescribing a mandatory approval 27. Should FinCEN refine or clarify 38. Is clarification needed on how the
requirement in the regulation? If the obligation related to having the proposed SAR reporting requirements
FinCEN does not eliminate the specified technical capabilities to block, freeze, interact with PPSIs’ obligations related
approval requirement, should FinCEN and reject impermissible transactions? to blocking, freezing, and rejecting
consider amending the requirement? 28. Are there aspects of the proposed transactions, recordkeeping, or
Are there alternatives to board of requirement that could unintentionally responding to lawful orders?
directors, an equivalent governing body, constrain PPSIs’ choice of technical or 39. Should FinCEN reconsider its
or appropriate senior management that operational approaches? If so, please decision not to impose any SAR
would be more appropriate? explain. obligation with respect to secondary
20. Should FinCEN impose the 29. Is FinCEN’s proposed language market activity? In what circumstances
supervision and enforcement framework specifying PPSIs must have the would secondary market reporting be
outlined in this proposal for PPSIs? technical capabilities to block, freeze, most beneficial and how burdensome
21. If the supervision and and reject impermissible transactions would such a reporting obligation be?
enforcement framework is implemented occurring on the secondary market For example, should PPSIs be required
for PPSIs should FinCEN further refine appropriately scoped and sufficiently
or clarify any of the concepts or to report secondary market suspicious
clear? Does it capture activity it should activity but only at a higher standard
definitions outlined in this proposal, not? Does it leave out activity it should
including ‘‘significant or systemic than in primary market transactions,
include? such as requiring reporting only when a
failure,’’ ‘‘failure to establish an AML/ 30. What technical, operational, or
CFT program,’’ ‘‘any written PPSI ‘‘knows’’ a transaction meets
architectural challenges, if any, might
communication,’’ and ‘‘significant specified criteria?
PPSIs face in implementing block,
AML/CFT supervisory action’’? freeze, and reject capabilities? How can G. Questions on Proposed
22. Should a revocation of a permitted FinCEN account for such challenges in Recordkeeping Requirements
payment stablecoin issuer’s application light of the GENIUS Act’s clear directive
to a primary Federal payment stablecoin 40. To what extent is it clear how
that PPSIs must have such technical payment stablecoins should be treated
regulator be accounted for in the abilities?
supervision and enforcement for purposes of FinCEN’s recordkeeping
31. Should FinCEN refine or clarify
framework? requirements, including whether
the obligation related to having the
23. Do any aspects of the GENIUS Act payment stablecoins should be
technical capabilities to comply and
framework with regards to supervision, considered ‘‘money,’’ ‘‘funds,’’
actual compliance with the terms of
examination, and enforcement need to ‘‘currency,’’ or another category under
lawful orders?
be better accounted for if the framework the proposed rule?
32. Is FinCEN’s proposed language
was implemented for PPSIs, including a specifying PPSIs must have the 41. Would Recordkeeping and Travel
consultation framework when a primary technical capabilities to comply with Rule obligations for PPSIs and other
Federal payment stablecoin regulator the terms of lawful orders regarding the financial institutions be clearer if
intends to take an AML/CFT secondary market appropriately scoped FinCEN codified a PPSI-specific
enforcement action or significant AML/ and sufficiently clear? Does it capture Recordkeeping and Travel Rule in part
CFT supervisory action? activity it should not? Does it leave out 1033?
24. Should the proposed consultation activity it should include? 42. The Recordkeeping and Travel
process include an asset threshold—i.e., Rule proposal implements the GENIUS
consultation is required for any E. Questions on Currency Transaction Act’s directive relative to ‘‘high-value
significant AML/CFT supervisory Reporting transaction.’’ How else could this
actions involving PPSIs with $10 billion 33. Should FinCEN impose on PPSIs provision of the GENIUS Act be
or more in assets? In addition, or as an currency transaction reporting implemented?
alternative, should the proposed rule obligations? What would be the risks in H. Questions on Proposed Special
provide the option for PPSIs to request not doing so? Information-Sharing Procedures
their primary Federal payment 34. What, if any, additional
stablecoin regulator consult with exemptions should FinCEN promulgate 43. Are there aspects of the
FinCEN prior to initiating a significant for PPSIs relating to currency information sharing framework that
would benefit from clarification or
lotter on DSK8BHNXB4PROD with PROPOSALS3
AML/CFT supervisory action? transaction reporting obligations?
25. Notwithstanding the benefits of modification when applied to PPSIs,
the proposed consultation described F. Questions on Proposed Suspicious including definitions in 31 CFR
above, the proposal may result in Activity Reporting 1010.505?
additional review during an 35. Is FinCEN’s proposal clear 44. To what extent would PPSIs
examination. How can FinCEN and the regarding SAR obligations relating to participate in voluntary information
primary Federal payment stablecoin secondary market activity. If not, why sharing with other financial institutions
regulator streamline the consultation not and how can it be improved? under section 314(b)?
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00041 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
18622 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
45. Are there legal, operational, or capture the full lifecycle of a payment in consultation with the Department of
technical considerations that could stablecoin? Justice.322
affect PPSIs’ ability or willingness to 3. What best practices would PPSIs E.O. 14294 further directs that the
engage in voluntary information sharing consider in developing and regulatory text of all NPRMs and final
related to payment stablecoin implementing policies, procedures, and rules with criminal consequences
transactions? internal controls designed to ensure published in the Federal Register after
ongoing compliance with the proposed May 9, 2025 should explicitly state a
I. Questions on Proposed Special mens rea requirement for each element
effective sanctions compliance program
Standard of Diligence of a criminal regulatory offense,
requirements?
46. Are there aspects of the special 4. What technical, operational, or accompanied by citations to the relevant
standard of diligence framework that architectural controls might PPSIs provisions of the authorizing statute.
would benefit from clarification or consider in implementing block, freeze, B. Criminal Enforcement for Chapter X
modification when applied to PPSIs? and reject capabilities to comply with Obligations
47. To what extent is it clear how the U.S. sanctions, including blocking
special standards of diligence applicable stablecoins of blocked persons traded on Willful violations of the regulations
to correspondent and private banking the secondary market or rejecting proposed to be added to Chapter X, if
accounts apply to PPSIs and to activities transactions on the secondary market finalized, may be subject to criminal
involving payment stablecoins? that involve sanctioned jurisdictions, penalties pursuant to 31 U.S.C. 5322
48. Are there types of relationships, such as Iran? and regulations promulgated 31 CFR
accounts, or arrangements involving 5. To what extent does the proposed chapter X. The statutory authority for
PPSIs that may raise questions about rule appropriately afford PPSIs criminal liability requires a mens rea of
whether they should be treated as flexibility to determine how to willfulness as an element under 31
correspondent accounts, private banking implement the technical capability to U.S.C. 5322(a) and 31 U.S.C. 5322(b).
accounts, or neither? block, freeze, and reject transactions, FinCEN’s existing regulation, 31 CFR
49. What challenges, if any, would consistent with their business models, 1010.840, that sets out criminal
PPSIs face in identifying, collecting, or technologies, and risk profiles? penalties for violations of regulations
verifying information required to 6. What risk factors should PPSIs promulgated in 31 CFR chapter X also
comply with the special standards of consider when conducting risk includes a mens rea of willfulness. In
diligence, including information related assessments under the proposed rule, drafting this statement, FinCEN has
to ownership, control, or source of including customer, product, consulted with the Department of
funds? transaction, geographic, and Justice.
technological risks? C. Criminal Enforcement for Chapter V
J. Question on Proposed Effective Date
7. OFAC is proposing an effective date Obligations
50. FinCEN is proposing an effective of 12 months from the date of issuance Willful violations of the regulations
date of 12 months from the date of of the final rule to allow sufficient time proposed to be added to Chapter V, if
issuance of the final rule to allow to review and implement the effective finalized, may be subject to criminal
sufficient time for PPSIs to review and sanctions compliance program penalties pursuant to 50 U.S.C. 1705, 50
implement its requirements. FinCEN requirements. OFAC solicits comment U.S.C. 4315, 19 U.S.C. 3907, 21 U.S.C.
solicits comment on the proposed on the proposed effective date. 1906, and regulations promulgated
effective date. thereunder. The statutory authority for
XI. Executive Order 14294 Fighting
K. Question on AML/CFT Requirements Overcriminalization in Federal criminal liability under 50 U.S.C.
for Foreign Payment Stablecoin Issuers Regulations 1705(c), 50 U.S.C. 4315(a), 19 U.S.C.
3907(a)(2), and 21 U.S.C. 1906(a)
51. Through this rulemaking FinCEN A. Overview requires a mens rea of willfulness as an
is only proposing application of AML/
Executive Order 14294 Fighting element. OFAC’s existing regulations
CFT requirements to PPSIs. Are there
Overcriminalization in Federal that set out criminal penalties for
particular requirements that FinCEN has
Regulations requires that agencies violations of regulations issued
proposed to apply to PPSIs that should
promulgating regulations potentially pursuant to these statutes also include
or should not apply to foreign payment
subject to criminal enforcement a mens rea of willfulness. In drafting
stablecoin issuers? Please describe why
explicitly describe the conduct subject this statement, OFAC has consulted
and any benefits and drawbacks.
to criminal enforcement, the authorizing with the Department of Justice.
X. Sanctions Request for Comment statutes, and the mens rea standard
XII. Regulatory Impact Analysis
applicable to those offenses.320 Section
OFAC seeks comments on the FinCEN and OFAC have analyzed the
5 of E.O. 14294 directs that all future
following topics. For all responses, proposed rule as required under E.O.
notices of proposed rulemaking and
commenters are encouraged to provide 12866,323 E.O. 13563,324 E.O. 14192,325
final rules published in the Federal
the basis for any conclusions drawn in
Register, the violation of which may
their comments. 322 Id.
constitute criminal regulatory offenses,
1. Are the proposed effective 323 E.O. 12866, Regulatory Planning and Review,
should include a statement identifying
sanctions compliance program 58 FR 51735 (Oct. 4, 1993).
that the rule or proposed rule is a 324 E.O. 13563, Improving Regulation and
regulations clear regarding the
lotter on DSK8BHNXB4PROD with PROPOSALS3
criminal regulatory offense and the Regulatory Review, 76 FR 3821 (Jan. 21, 2011).
minimum elements PPSIs must include
authorizing statute.321 E.O. 14294 325 See E.O. 14192, Unleashing Prosperity
in their programs? If not, which aspects Through Deregulation, 90 FR 9065 (Feb. 6, 2025);
directs agencies to draft this statement
would benefit from additional Office of Management and Budget (OMB), M–25–
clarification? 320 E.O. 14292, Fighting Overcriminalization in
20, Guidance Implementing Section 3 of Executive
Order 14192, Titled ‘‘Unleashing Prosperity
2. Is the proposed definition of Federal Regulations, 90 FR 20363, 20364 (May 14, Through Deregulation’’ (Mar. 26, 2025), available at
‘‘Payment stablecoin-related activity’’ 2025). https://www.whitehouse.gov/wp-content/uploads/
sufficiently clear and comprehensive to 321 Id. 2025/02/M-25-20-Guidance-Implementing-Section-
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00042 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18623
the Regulatory Flexibility Act (RFA),326 (iii) monitor and report any suspicious OFAC (1) describe the current
the Unfunded Mandates Reform Act of transaction relevant to a possible regulatory requirements and background
1995 (UMRA),327 and the Paperwork violation of law or regulation; and (iv) practices against which the proposed
Reduction Act (PRA).328 maintain the technical capabilities, rule would introduce changes and (2)
This proposed rule has been policies, and procedures to block, establish baseline estimates of the
determined to be a ‘‘significant freeze, and reject specific or number of covered financial institutions
regulatory action’’ under section 3(f) of impermissible transactions that violate and other entities that could be affected
E.O. 12866. FinCEN and OFAC have Federal or State law, rules, or by the proposed rule.343 The analysis
included an Initial Regulatory regulations.333 It also requires PPSIs to then briefly reviews elements of the
Flexibility Analysis (IRFA) pursuant to maintain an effective sanctions proposed rule that most directly inform
the RFA as the proposed rule may have compliance program.334 The proposal how foreseeable economic impacts
a significant economic impact on a would also implement a GENIUS Act would flow from how covered financial
substantial number of certain types of requirement that PPSIs have the institutions and their respective
affected small entities.329 Pursuant to technological capability to comply and regulators would need to newly
analysis required by UMRA, FinCEN will comply with the terms of any undertake activities to comply with the
and OFAC conclude it is unlikely that lawful order in order to issue payment proposed regulation in which they
the proposed rule, if implemented, stablecoins.335 would otherwise be unlikely to engage
would result in a novel annual In so doing, FinCEN and OFAC in the ordinary course of business.344
expenditure of more than $193 million contemplate a number of benefits for Next, the RIA presents the anticipated
by State, local, and Tribal governments PPSIs, law enforcement and national benefits and estimated costs to the
or by the private sector.330 security agencies, and the general public respective affected parties that would be
As described above,331 the proposed that would flow from (1) ensuring that associated with compliance.345 Finally,
rule would require certain issuers of a PPSI’s AML/CFT program is the assessment concludes with a brief
‘‘payment stablecoins,’’ referred to substantively consistent with the discussion of alternative policies
herein as PPSIs, to ‘‘be treated as a requirements of other financial FinCEN and OFAC considered and
financial institution for purposes of the institution types, and where could have proposed, including an
Bank Secrecy Act, and as such, shall be appropriate, that PPSI are subject to evaluation of the relative economic
subject to all Federal laws applicable to additional provisions to further mitigate merits of each against the expected
financial institutions located in the ML/TF risks unique to PPSIs; and (2) value of the rule as proposed.346
United States relating to economic codifying longstanding economic
sanction compliance expectations and 1. Broad Economic Considerations
sanctions, prevention of money
establishing a minimum threshold for In performing its assessment of
laundering, customer identification, and
compliance standards. impact, FinCEN and OFAC took into
due diligence.’’ 332 Specifically, this
This regulatory impact analysis (RIA) consideration certain fundamental
NPRM, among other things, would
begins by describing the broad economic problems that the proposed
implement the GENIUS Act’s directive
economic analysis undertaken to inform rule is expected to address as well as the
for PPSIs to: (i) maintain an effective
the expectations of the proposed rule’s general social and economic costs that
AML program, which includes
economic impact and burden.336 This is may ensue from PPSIs with ineffective
appropriate risk assessments and
followed by pieces of additional and, in BSA compliance or inadequate
designation of an officer to supervise the
some cases, more specifically tailored economic sanctions compliance
program; (ii) retain appropriate records;
analysis as required by E.O.s 12866, programs. Because this NPRM is being
3-of-Executive-Order-14192-Titled-Unleashing-
13563 and 14192,337 the RFA,338 the issued pursuant to statutory
Prosperity-Through-Deregulation.pdf. UMRA,339 and the PRA.340 Requests for obligations,347 the necessity for FinCEN
326 5 U.S.C. 601 et seq. comments on the RIA—regarding and OFAC to independently identify
327 2 U.S.C. 1532. specific findings, assumptions, or and articulate fundamental economic
328 44 U.S.C. 3501 et seq. expectations, or with respect to the problems that the proposed rule is
329 This economic expectation is sensitive to key
analysis in its entirety—can be found in intended to address, as the basis for
assumptions about how potentially affected the final subsection.341 These requests
financial institutions would respond to the
regulatory action,348 is attenuated
proposed requirements. FinCEN and OFAC request for comments have been previewed because, at best, this activity would
comment on whether it would instead be more throughout the RIA. complement the problem identification
reasonable to certify that the proposed rule would already performed by Congress.349
not have a significant economic impact on a A. Assessment of Impact
substantial number of small entities. Consistent with best practices in 343 See infra section XII.A.2.
330 The UMRA requires an assessment of any
Federal mandates that may result in annual
regulatory economic analysis, the 344 See infra section XII.A.3.
expenditures of $100 million or more, adjusted for assessment of impact begins with an 345 See infra section XII.A.4.
inflation, before issuing a general notice of overview of broad economic 346 See infra section XII.A.5.
proposed rulemaking. 2 U.S.C. 1532(a). FinCEN and 347 See generally supra section II.
considerations identifying, among other
OFAC have not anticipated material changes in 348 See E.O. 12866, section 1(b)(1) (‘‘Each agency
expenditures for State, local, and Tribal
things, the need for the policy
shall identify the problem that it intends to address
governments, insofar as they would not participate intervention.342 Next, FinCEN and (including, where applicable, the failures of private
in the primary activities of monitoring or enforcing markets or public institutions that warrant new
compliance of the newly proposed requirements in 333 12 U.S.C. 5903(a)(5)(A)(i)–(iv). agency action) as well as assess the significance of
a way that differs from current involvement, 334 12 U.S.C. 5903(a)(5)(A)(vi). that problem.’’).
lotter on DSK8BHNXB4PROD with PROPOSALS3
thereby incurring novel incremental costs. But 335 12 U.S.C. 5903(a)(6)(B). 349 With respect to AML/CFT programs in
because the proposed rule would affect entities in 336 See infra section XII.A. particular, Congress instructed FinCEN to consider
the private sector that are covered financial 337 See infra section XII.B. the potential economic inefficiencies engendered by
institutions, FinCEN and OFAC have considered the presence of market externalities when
338 See infra section XII.C.
expenditures these private entities may incur, promulgating implementing regulations. See 31
339 See infra section XII.D.
pursuant to UMRA, as part of the regulatory impact U.S.C. 5318(h)(2)(B)(i) (stating financial institutions
in its assessment below. 340 See infra section XII.E.
are spending private compliance funds for a public
331 See supra section VI.A.1. 341 See infra section XII.F.
and private benefit, including protecting U.S.
332 12 U.S.C. 5903(a)(5)(A). 342 See infra section XII.A.1. Continued
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00043 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
18624 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
Nevertheless, FinCEN and OFAC have proposed requirements, FinCEN and currently administered by OFAC and
remained mindful of these animating OFAC have attempted to identify the must therefore caveat that the
considerations as well as the general incremental expected economic effects incremental effects estimated in
social and economic costs that may of each component of the proposal as subsequent sections are similarly based
ensue from an ineffective BSA and precisely as practicable against this on the presumption of full compliance
sanctions compliance regime. baseline. Nevertheless, in certain cases, as status quo. OFAC invites comments
FinCEN and OFAC expect that the FinCEN and OFAC can only make on whether this assumption, or the
proposed rulemaking would qualitative assessments. baseline it establishes, is the most
meaningfully alleviate certain As a first step in the process of appropriate and informative for the
underlying economic problems that isolating these anticipated marginal purposes of this RIA.
could otherwise impair the effective effects, FinCEN and OFAC assessed the i. Regulatory Baseline
administration of the BSA and U.S. regulatory and market landscape facing
sanctions laws, as well as potentially current stablecoin issuers, and potential FinCEN and OFAC took various
distort affected markets. These include future PPSIs, that would be affected by components of the current regulatory
potential problems that flow from the the proposed rule, including an estimate landscape into consideration when
incidence of both positive and negative of the expected near-term number of assessing the increments by which the
externalities in connection with BSA potential PPSIs, their existing regulatory proposed rule would impose changes on
and sanctions compliance activities, requirements, and the burden they the status quo.355 Specifically, FinCEN
certain information asymmetries, and either would or currently face in and OFAC considered (1) existing AML/
the potential for regulatory arbitrage in connection with the compliance CFT requirements, (2) existing sanctions
the absence of uniform minimum activities the proposed rule would compliance requirements (3) state
standards for PPSIs’ BSA and sanctions require. FinCEN and OFAC also briefly regulations, and (4) required activities
compliance obligations.350 discuss other categories of persons and proposed here that would also be
The expected benefits of the proposed entities (i.e., regulators, compliance necessary to satisfy requirements in
rule, as discussed below, are therefore examiners, law enforcement and other proposed related rules that would
linked by the extent to which the national security agencies, and certain implement the GENIUS Act but are not
proposed requirements would address members of the general public) that are part of this NPRM.356 The extent to
these fundamental economic expected to be directly affected by the which each of these components of the
problems.351 proposed rule. regulatory baseline is germane to the
FinCEN acknowledges that the novel incremental burden of a given
2. Institutional Baseline and Affected future PPSI is expected to depend on
discussion below does not include an
Parties the unique facts and circumstances of
assessment of the baseline level of
In proposing this rule, FinCEN and general compliance with existing BSA the PPSI under consideration.357
OFAC considered the incremental requirements and must therefore caveat a. Existing AML/CFT Requirements
impacts of the proposed requirements that the incremental effects estimated in
Through this rulemaking FinCEN
relative to the current state of the subsequent sections are based on the
proposes, as required by the GENIUS
affected markets and their presumption of full compliance with the
Act, imposing certain novel obligations
participants.352 This baseline analysis of current rules.354 FinCEN does not
or obligations that differ in some
the parties that would be affected by the attempt to estimate a baseline material respects from stablecoin
proposed rule, their current obligations population of currently non-compliant issuers’ current obligations. In many
and related activities, and currently entities that could be differently affected respects, however, FinCEN expects
accrued costs and/or benefits satisfies by the rule because it is unclear that the issuers’ obligations under this proposal,
analytical best practices by describing proposed rule would alter the if finalized, would be comparable to
the alternative of not pursuing the compliance choices already made by existing ones. If an existing stablecoin
proposed, or any other, novel regulatory those financial institutions. FinCEN
action.353 In each case, for new invites comment on whether this 355 Analyzing the anticipated effects of a rule
assumption, or the baseline it implies, is requires first establishing what the proposed
financial system from illicit finance risks); see also appropriate for the purposes of this changes will be measured against, and establishing
31 U.S.C. 5318(h)(2)(B)(iii) (stating that AML/CFT such a counterfactual often requires making
programs safeguard national security and generate
analysis.
numerous assumptions. The extent to which the
significant public benefits by prevent illicit flows of Relatedly, prior to the passage of the proposed rule would impose incremental economic
funds and assisting law enforcement and national GENIUS Act, there was no explicit legal effects relies on a number of assumptions about the
security agencies with information). requirement for U.S. person stablecoin strategic decisions current and future stablecoin
350 See, e.g., FinCEN, Anti-Money Laundering and
issuers to establish and maintain a issuers would make, responsive to various factors,
Countering the Financing of Terrorism Programs, 89 that include but are not limited to: (1) the decision
FR 55428, 55451 (July 3, 2024). sanctions compliance program. to remain/become a stablecoin issuer; (2) the
351 See infra section XII.A.4.i. However, as U.S. persons, U.S. decision to pursue registration as a PPSI, and if so;
352 In this context, FinCEN and OFAC employ the stablecoin issuers are, and from (3) the decision about which type of PPSI status to
term ‘‘market’’ in its broadest economic sense, inception have always been, required to seek. These assumptions, in turn, inform the
referring to any set of exchanges, transactions, or selection of the most informative counterfactual(s),
comply with U.S. sanctions laws including the appropriate regulatory baseline.
actions that involve counterparties with unique
objectives. The baseline here set forth also forms the administered by OFAC. OFAC 356 See supra note 11.
counterfactual against which the quantifiable effects acknowledges that the discussion below 357 For example, if one assumes a current
of the rule are measured; therefore, substantive does not include an assessment of the stablecoin issuer decides to both remain an issuer
lotter on DSK8BHNXB4PROD with PROPOSALS3
errors in or omissions of relevant data, facts, or baseline level of general compliance by and pursue registration as a PPSI, the most relevant
other information may affect the conclusions regulatory baseline comparison might be relative to
formed regarding the general and economically U.S. persons with sanctions law as the current AML/CFT requirements for MSBs that
significant impacts of the rule. FinCEN and OFAC are money transmitters. Alternatively, if a decision
invite comment on the accuracy of the baseline assess all costs and benefits of available regulatory is made to newly become a stablecoin issuer, and
population estimates as well as any supporting alternatives, including the alternative of not to do so as a bank subsidiary, then the current BSA
studies, data, or anecdotes. regulating’’). requirements of the parent bank might be a more
353 See E.O. 12866, section 1(a) (‘‘In deciding 354 See infra section XII.A.4; see also infra appropriate regulatory baseline to assess the
whether and how to regulate, agencies should sections XII.C. and XII.E. incremental burden of that PPSI.
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00044 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18625
issuer’s current regulatory obligations obligations on foreign bank their status as U.S. persons subject to
already include AML/CFT relationships with Iranian-linked U.S. sanctions laws. Furthermore, with
requirements, FinCEN expects this to financial institutions designated under respect to non-U.S. person stablecoin
primarily flow from the applicability of IEEPA and IRGC-linked persons issuers that would become U.S. persons
the BSA to that stablecoin issuer as an designated under IEEPA.364 Because the to qualify as a PPSI, OFAC’s experience
MSB that is a money transmitter. The FinCEN requirements for banks already administering U.S. sanctions has
exposition on this in section V.A is encompass a broader set of elements, demonstrated that sophisticated multi-
adopted here by reference as part of the and these elements are largely the same jurisdictional financial actors often
RIA regulatory baseline. as the requirements being proposed to maintain sanctions compliance
Alternatively, a future PPSI might apply to PPSIs, the incremental change programs aligned with U.S. sanctions
exist as the subsidiary of an insured to the regulatory baseline of FinCEN requirements regardless of their status
depository institution or as an requirements for future PPSIs that as U.S. persons.368 The exposition on
uninsured national bank. In this case, would be subsidiaries of insured this in section V.B is adopted here by
because such institutions are also depository institutions or uninsured reference as part of the RIA regulatory
currently subject to a range of BSA national banks is expected to be smaller baseline.
obligations, including AML/CFT than for PPSIs that would transition into
program obligations, it is reasonable to the status from previously being c. State Regulations
consider the regulatory requirements of MSBs.365 Stablecoin issuers may also be subject
the parent institution a more relevant to state regulations, which can vary in
baseline. In addition to the AML/CFT b. Existing Sanctions Compliance
Requirements (1) general level of detail and
requirements for MSBs discussed above, complexity, which as a baseline matter
banks and credit unions are subject to Prior to the passage of the GENIUS would introduce variation in the
a number of additional FinCEN Act, there was no explicit regulatory incremental compliance burden of the
requirements, including: (1) CIP requirement for U.S. persons to proposed rule’s program requirements;
requirements,358 (2) beneficial establish and maintain a sanctions and (2) nexus with AML/CFT and
ownership information (BOI) compliance program. However, all U.S. sanctions compliance program
requirements for legal entity persons, including U.S.-based stablecoin requirements, from state to state. For
customers,359 (3) required reporting on issuers, are required to comply with example, the New York State
transactions of exempt persons,360 (4) U.S. sanctions pursuant to regulations Department of Financial Services
additional recordkeeping administered by OFAC. Therefore, (NYDFS) has detailed virtual currency
requirements,361 (5) due diligence stablecoin issuers that would be subject regulations and guidance specifically for
programs for correspondent accounts for to the proposed rule as PPSIs would be stablecoins.369 When a stablecoin issuer
foreign financial institutions and private independently required to comply with applies for a license or a charter, NYDFS
banking accounts,362 (6) requirements existing sanctions obligations as U.S. reviews the issuers’ business plan,
related to the prohibition on persons,366 which as a practical matter product offerings, and business model
correspondent accounts for foreign shell typically involves the development and and may consider whether the issuers is
banks and records concerning owners of implementation of a risk-based registered with FinCEN as an MSB as
foreign banks and agents for service of sanctions compliance program in order well as take into consideration the
legal process,363 and (7) reporting to comply with such existing sanctions issuer’s AML program and sanctions
obligations.367 Thus, OFAC expects compliance.370 After licensure, a
358 31 CFR 1020.220; see generally Supporting
PPSIs’ obligations under this proposed stablecoin issuer must obtain NYDFS’s
Statement for OMB Control No. 1506–0026:
FinCEN, Customer Identification Program rule, if finalized, would be comparable written approval before issuing a
Regulatory Requirements for Banks (Aug. 29, 2024), to existing obligations stemming from stablecoin.371 NYDFS looks at a range of
available at https://www.reginfo.gov/public/do/
PRAViewDocument?ref_nbr=202408-1506-003.
potential risks before authorizing a
FinCEN, Prohibition on Correspondent Accounts for stablecoin issuer to issue a stablecoin,
359 31 CFR 1020.210(a)(2)(v) and (b)(2)(v),
Foreign Shell Banks; Records Concerning Owners of
1010.230(b)(c); see generally Supporting Statement Foreign Banks and Agents for Service of Legal including AML and sanctions
OMB Control No. 1506–0070: FinCEN, Beneficial Process (July 31, 2025), available at https://
Ownership Requirements for Legal Entity Customers www.reginfo.gov/public/do/ 368 This understanding aligns with OFAC’s
(Apr. 30, 2024), available at https:// PRAViewDocument?ref_nbr=202501-1506-001. guidance in the 2019 Compliance Framework,
www.reginfo.gov/public/do/ 364 31 CFR 1060.300; see generally Supporting which notes that ‘‘OFAC strongly encourages
PRAViewDocument?ref_nbr=202404-1506-004. organizations subject to U.S. jurisdiction, as well as
360 31 CFR 1020.315; see generally Supporting
Statement OMB Control No. 1506–0066: FinCEN,
Reporting Obligations on Foreign Bank foreign entities that conduct business in or with the
Statement OMB Control No. 1506–0012: FinCEN, United States, U.S. persons, or using U.S.-origin
Relationships with Iranian-Linked Financial
Transactions of Exempt Persons Regulations, and goods or services, to employ a risk-based approach
Institutions Designated under IEEPA and IRGC-
FinCEN Form 110, Designation of Exempt Persons to sanctions compliance by developing,
Linked Persons Designated under IEEPA (July 8,
Report (Oct. 28, 2024), available at https:// implementing, and routinely updating a sanctions
www.reginfo.gov/public/do/ 2025), available at https://www.reginfo.gov/public/
do/PRAViewDocument?ref_nbr=202507-1506-001. compliance program (SCP).’’ 2019 Compliance
PRAViewDocument?ref_nbr=202410-1506-001.
361 31 CFR 1020.410; see generally Supporting
365 If, under an effective GENIUS framework, the Framework, supra note 285, at p. 1.
369 23 NYCRR Part 200; NYDFS, Guidance on the
Statement OMB Control No. 1506–0059: FinCEN, issuer of an existing stablecoin product applies and
is granted registration as a PPSI, then its obligations Issuance of U.S. Dollar-Backed Stablecoins (June 8,
Additional Records to be Made and Retained by
Banks (Oct. 29, 2024), available at https:// under the BSA as an MSB would be superseded by 2022), available at https://www.dfs.ny.gov/industry_
www.reginfo.gov/public/do/ its new obligations as a PPSI. guidance/industry_letters/il20220608_issuance_
PRAViewDocument?ref_nbr=202410-1506-006. 366 In 12 U.S.C. 5901(23), the GENIUS Act defines stablecoins.
370 23 NYCRR 200.4; see also NYDFS, Guidance
PPSIs as persons incorporated in the United States.
lotter on DSK8BHNXB4PROD with PROPOSALS3
362 31 CFR 1020.610, 1020.620, 1010.610,
1010.620; see generally Supporting Statement OMB As such, in order to issue stablecoins, an issuer on the Issuance of U.S. Dollar-Backed Stablecoins
Control No. 1506–0046: FinCEN, Due Diligence would need to register as a U.S. person and would (June 8, 2022), available at https://www.dfs.ny.gov/
Programs for Correspondent Accounts for Foreign therefore become subject to U.S. sanctions laws and industry_guidance/industry_letters/il20220608_
Financial Institutions and for Private Banking all resulting obligations. issuance_stablecoins.
371 23 NYCRR 200.10; see also NYDFS, Guidance
Accounts (Aug. 27, 2024), available at https:// 367 OFAC’s Enforcement Guidelines, 31 CFR part
www.reginfo.gov/public/do/ 501, Appendix A, include the existence, nature, and on the Issuance of U.S. Dollar-Backed Stablecoins
PRAViewDocument?ref_nbr=202408-1506-001. adequacy of a subject person as a factor in (June 8, 2022).
363 31 CFR 1020.630, 1010.630; see generally determining what administrative action to take in 372 NYDFS, Guidance on the Issuance of U.S.
Supporting Statement OMB Control No. 1506–0043: response to an apparent violation of U.S. sanctions. Dollar-Backed Stablecoins (June 8, 2022).
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00045 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
18626 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
compliance.372 In other states, recordkeeping burden to fully avoid OFAC invite comment, data, studies, or
stablecoin issuers do not have separate double-counting the costs of PPSI efforts reports that would enhance its ability to
virtual currency regulations and are across all PRA analyses covering the identify and quantify such effects.
instead regulated as money same activity.376
a. Affected Financial Institutions
transmitters.373
FinCEN and OFAC took these factors ii. Baseline of Affected Parties FinCEN and OFAC expect the
into consideration when assessing the FinCEN and OFAC expect the proposed rule to directly affect the
quantifiable incremental economic costs following populations to be directly financial institutions it would regulate.
of the proposed rule. In particular, affected by the proposed rule: (1) certain This includes all future PPSIs. For
FinCEN and OFAC were sensitive to the financial institutions, namely PPSIs and specifically those PPSIs that would be
additional challenges state regulatory PPSI-affiliated insured depository subsidiaries of insured depository
requirements would present to institutions or uninsured national institutions, FinCEN and OFAC
successfully disaggregating economic banks; (2) regulators and other considered that the proposed rule may
effects of the proposed rule from those compliance examiners; and (3) law also economically affect the parent
attributable to business activities enforcement and national security insured depository institutions.
otherwise undertaken with respect to agencies. FinCEN and OFAC also took
into consideration that certain other 1. PPSIs
state-level regulatory requirements.
persons, including PPSI business Because the proposed rule would
d. Other GENIUS Act Requirements for counterparties, clients/customers of specifically apply AML/CFT and
PPSIs PPSIs, and other members of the general economic sanctions compliance
As part of their analysis, FinCEN and public may be indirectly affected by the program requirements on PPSIs, they
OFAC contemplated additional proposed rule. However, for purposes of are expected to be the proposed rule’s
prospective baseline requirements— the remaining analysis, it was primary affected parties. To form an
once certain other, but related, rules determined that of these various groups estimate of the number of future PPSIs
proposed pursuant to the GENIUS Act of other affected parties, it would be the proposed rule would cover, FinCEN
are adopted as final rules—that would reasonable to limit further consideration and OFAC attempted to account for both
become part of a prospective future of the anticipated economic impact on existing stablecoin issuers, who may
PPSI’s regulatory baseline. Under the specific subpopulations of the general become PPSIs, as well as prospective
GENIUS Act, a PPSI is required to public, aside from to the general public future PPSIs that, but for the GENIUS
certify to its primary Federal payment as a whole,377 to direct customers of Act framework, would be unlikely to
stablecoin regulator or State payment PPSIs 378 and to further limit enter the market.
stablecoin regulator that it has consideration of the impact on such To estimate the expected population
implemented an AML program and customers as narrowly attributable to of future PPSIs, FinCEN and OFAC
economic sanctions compliance the proposed AML/CFT and sanctions began by conducting a comprehensive
program consistent with the compliance requirements.379 To the review of current products that were
requirements of the GENIUS Act within extent that economic impact on each individually identified by either
180 days of approval of its initial additional key, directly affected the product issuer or another market
application and annually thereafter.374 subpopulations of the general public participant as a ‘‘stablecoin.’’ This
Additionally, each PPSI that (1) is not should be considered, FinCEN and scoping of the initial review was
a State qualified payment stablecoin intended to be sufficiently broad so as
376 See supra note11; see also infra section XII.E.
issuer, (2) has a total outstanding to encompass all current products that
377 See infra section XII.A.2.ii.d.1.
issuance of less than $10 billion, and (3) 378 See infra section XII.A.2.ii.d.2.
could potentially meet the definitional
is supervised by a primary Federal 379 OFAC does not anticipate the proposed
criteria set forth in the GENIUS Act for
payment stablecoin regulator, is sanction compliance program requirements would a future ‘‘payment stablecoin.’’ 380 The
required, upon request, to submit to its have an incremental direct economic effect on a next step was to cull from this initial
regulator a report on that FQPSI’s future PPSI’s primary market customers because pool of stablecoin issuers, offering
OFAC’s proposed rule applies only to the PPSIs
compliance with the requirements of the themselves. Further, as noted previously, future
approximately 350 products, the proper
BSA and sanctions implemented by PPSIs would already be U.S. persons and therefore subpopulation of potential future PPSIs
OFAC.375 FinCEN and OFAC took these subject to U.S. sanctions laws irrespective of any that, following the GENIUS Act taking
regulations issued under the Act. As a result, they effect, would be able to pursue
requirements into consideration, noting would have already been prohibited from engaging
that because the statutory registration in prohibited transactions with or involving registration as a PPSI without first
requirements, which are distinct from prospective primary market customers, and OFAC’s needing to make substantive changes to
the ones covered in this proposed proposed additional requirement that the PPSI their current product attributes.381
would need to maintain an effective sanctions
rulemaking, necessitate the collection compliance program should not impose any 380 See 12 U.S.C. 5901(22); see also supra section
and production of certain information additional burden or economic impact on that
VI.C.1.viii.
and records that would flow from PPSI’s direct customers. To the extent a non-U.S.
381 See 12 U.S.C. 5903(a)(11), PPSIs are not
compliance with the requirements in person stablecoin issuer would become U.S.
persons to qualify as a PPSI, as discussed above in permitted to pay the holder of any payment
this proposed rule, it may not be section XII.A.2.i.b, OFAC’s experience stablecoin any form of interest or yield solely in
practicable to artificially segregate the administering U.S. sanctions has demonstrated that connection with the holding, use, or retention of
incremental components of the same sophisticated multi-jurisdictional financial actors, payment stablecoins. See also 12 U.S.C.
of the type that would seek to qualify as a PPSI, 5903(a)(1)(A). PPSIs are required to maintain
identifiable reserves backing its payment stablecoin,
lotter on DSK8BHNXB4PROD with PROPOSALS3
373 See, e.g., Texas Dep’t of Banking, GENIUS
often maintain sanctions compliance programs
aligned with U.S. sanctions requirements regardless on at least a one-to-one basis, with reserves
Act—Non Depository (last accessed Apr. 6, 2026) of their status as U.S. persons. Furthermore, where composed of certain specific, high-quality and
(noting that Texas ‘‘currently licenses and regulates a future PPSI’s direct customers are U.S. persons, liquid assets, including United States coins and
issuers of fiat-currency backed stablecoin as money those direct customers would already also be currency; demand deposits; and Treasury bills,
transmitters), available at https:// subject to existing U.S. sanctions requirements notes, or bonds. Accordingly, the GENIUS Act does
www.dob.texas.gov/money-services-business/ themselves. OFAC invites comment on whether the not allow payment stablecoins to be backed by, for
genius-act-non-depository. reasoning that its proposed rule would not have an example, other kinds of digital assets, nor does the
374 12 U.S.C. 5904(i)(1).
economic impact on direct customers of PPSIs is GENIUS Act allow payment stablecoins to be
375 12 U.S.C. 5905(a)(2)(D). reasonable. algorithmic backed.
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00046 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18627
FinCEN and OFAC applied certain monetary value.382 A PPSI must Table 1 provides a summary of how
filters on product characteristics to maintain identifiable reserves backing this review of identified current
eliminate identified stablecoins that did the payment stablecoin with specific, stablecoins effectively narrowed the
not comport with the definitional high quality, liquid assets, which total population to those that might, in
attributes of a payment stablecoin as include U.S. coins and currency, the future, be eligible to be considered
defined by the GENIUS Act and used demand deposits, and Treasury bills, payment stablecoins. Of the
this to sort the stablecoins’ issuers. notes, and bonds.383 Consequently, approximately 350 products examined,
To be a payment stablecoin, under the issuers who did not offer products only 43 meet the above criteria—i.e.,
GENIUS Act, a digital asset must be
pegged to the U.S. dollar were treated as were tri-partly fiat-backed, USD hard-
used or designed for payment or
unlikely to pursue PPSI registration in pegged centralized coins. Of these 43,
settlement, its issuer must be obligated
the future. In addition, stablecoin five were precluded from potential
to redeem or convert it for a fixed
amount of monetary value and not products with no central issuer were future payment stablecoin eligibility by
another digital asset, and its issuer must also considered unlikely to be their reserve holdings, nine by their
represent that it will maintain a stable associated with an entity that would yield, and one by both of these features.
value relative to a fixed amount of seek PPSI status.
TABLE 1—ESTIMATED POTENTIAL PAYMENT STABLECOIN POPULATION BY CRITERIA
Product Number of stablecoin products
Stablecoin classification Filtering criteria
population excluded
Full population .......................................................................... 352 None ....................................... 0.
Able to meet payment stablecoin criteria without significant 43 Fiat-backed, USD-pegged, 309 (from total).
restructure. centralized issuance, hard-
peg a.
Technically compliant with payment stablecoin reserves cri- 38 GENIUS Act defined reserve 5 (from technically eligible).
teria. holdings b.
Technically compliant with payment stablecoin yield require- 34 Non-yield bearing c .................. 9 (from technically eligible).
ments.
Potential payment stablecoins .................................................. 30 All ............................................ 322 (from total) 13 (from tech-
nically eligible).
a As defined in section 2(22)(A) of the GENIUS Act, a payment stablecoin must be a digital asset that is, or designed to be, used as a means
of payment or settlement, and, and as defined in section 2(22)(A)(ii)(II) of the GENIUS Act, a payment stablecoin must be redeemable for a fixed
amount, and the issuer represents that it will maintain a stable value relative to the value of a fixed amount of monetary value. FinCEN and
OFAC view product pegging to the U.S. dollar as opposed to another currency as a practical requirement to hold only USD-denominated reserve
assets.
b As required by section 4(a)(1)(A) of the GENIUS Act, the issuer of a payment stablecoin must only hold asset types as provided by the Act
as reserves.
c As required by section 4(a)(11) of the GENIUS Act, a payment stablecoin must not offer yield.
Using this method, FinCEN and current entities that could be potential despite being technically eligible to
OFAC identified 30 products issued by future PPSIs subject to the proposed register.387
25 unique entities that matched the rule may be between 20 and 40.385 FinCEN and OFAC’s analysis also
specified criteria. As such, there are at FinCEN and OFAC nonetheless considered the need for this impact
least 25 existing issuers of stablecoins acknowledge that a wide range of factors assessment to, in some fashion, account
that, if the regulations implementing the that could potentially influence the for potential future PPSIs that have not
GENIUS Act were presently effective, choice of eligible institutions to apply yet entered the stablecoin market. In the
would appear to be eligible to apply to for PPSI status in the future, including aforementioned review of 350 current
be PPSIs. Understanding that some of market demand, strategic operational stablecoin products, 63 products were
these entities might still choose not to decisions, and future developments in identified as issued by an entity that
seek PPSI status,384 and allowing that the digital asset landscape.386 In appeared facially eligible for potential
other current stablecoin issuers could, general, where current stablecoin future status as either a PPSI or a foreign
in the interim, still modify the digital issuers see PPSI standards as payment stablecoin issuer (FPSI).388 Of
assets that they issue in order to be representing costs that would outweigh those issued since 2018, approximately
eligible to seek PPSI status once the the benefits of achieving the PPSI 45 percent (28 stablecoins) were issued
GENIUS Act becomes effective, FinCEN designation, they may voluntarily within the last two calendar years (2024
and OFAC anticipate that the number of choose another regulatory option and 2025), with year-over-year growth
382 12 U.S.C. 5901(22). 386 FinCEN and OFAC invite comment on the be approved by the appropriate regulatory agency
383 12 U.S.C. 5903(a)(1). driving factors that would incentivize an issuer to to be entitled to the designation, the designation
384 The degree to which the current stablecoin apply for PPSI status. may serve as a stronger signal of regulatory
387 FinCEN and OFAC expect that issuers of compliance in contrast to a self-adopted
lotter on DSK8BHNXB4PROD with PROPOSALS3
market would migrate to PPSI status under the
payment stablecoin products may have several designation. Other issuers may have alternative
proposal remains uncertain. The issuers of several incentives to avoid the PPSI designation, despite
incentives to apply for status as a PPSI instead of
large products have made varying statements about existing under another designation. First, because being technically able to comply with its
their interest in seeking PPSI status. PPSIs would be required by law to maintain certain requirements.
385 FinCEN and OFAC invite comments on the 388 In addition to activities permitted for PPSIs,
standards (for example, holding certain assets in
methodology and assumptions used to derive this their reserve portfolio), the designation may be the GENIUS Act allows for the offering and selling
estimate. attractive to more risk-averse investors or payment in the United States of payment stablecoins issued
stablecoin customers. In addition, because potential by FPSIs subject to certain requirements. See 12
PPSIs would be required to apply for that status and U.S.C. 5902(b)(2).
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00047 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
18628 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
in 2025 slightly lower than the year PPSIs in each of the first three years of AML/CFT requirements, as discussed
prior. Because the stablecoin market is the GENIUS Act being effective.392 above in section VI.C.2, the GENIUS Act
still relatively nascent and has FinCEN and OFAC project that of the distinguishes between the categories
historically faced varying levels of 50 anticipated PPSIs, approximately 60 ‘‘primary Federal payment stablecoin
regulatory uncertainty, basing percent would be subsidiaries of regulator’’ and ‘‘State payment
expectations of stable or sustainable insured depository institutions and 40 stablecoin regulator,’’ and this NPRM
future growth rates on past trends percent would be other PPSIs.393 includes proposals to (1) amend
would be exceedingly speculative and Because this projection represents best § 1010.810(b) to delegate examination
generally inadvisable. On the one hand, efforts given limited information, the authority to the primary Federal
the number of stablecoin market public is strongly encouraged to provide payment stablecoin regulators and (2)
entrants may increase in light of the additional comments, data, and other
apply the existing delegation to the IRS
enhanced certainty and clarity afforded information that could enhance the
at § 1010.810(b)(8) for PPSIs regulated
by the GENIUS Act framework. On the accuracy and precision of these
estimates. by State payment stablecoin
other hand, it is also possible that a