NPRM: Permitted Payment Stablecoin Issuer AML/CFT program and sanctions compliance program requirements (91 FR 18582) (Part 1 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.
18582 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
DEPARTMENT OF THE TREASURY address, or other contact information) or requirements for PPSIs and tasks
confidential business information that implementing those requirements to the
Office of Foreign Assets Control you do not want publicly disclosed. All Office of the Comptroller of the
comments are public records; they are Currency (OCC), the Board of Governors
31 CFR Part 502 publicly displayed exactly as received, of the Federal Reserve System (Board),
and will not be deleted, modified, or the Federal Deposit Insurance
Financial Crimes Enforcement Network redacted. Comments may be submitted Corporation (FDIC), the National Credit
anonymously. Follow the search Union Administration (NCUA), and, as
31 CFR Parts 1010 and 1033 instructions on https:// applicable, any State payment
[Docket No. FINCEN–2026–0100] www.regulations.gov to view public stablecoin regulators.2 The OCC, Board,
comments. FDIC, and NCUA are responsible for
RIN 1506–AB73 In accordance with 5 U.S.C. 553(b)(4), establishing a process and framework
a summary of this rule may be found at for the licensing, regulation,
Permitted Payment Stablecoin Issuer https://www.regulations.gov under examination, and supervision of PPSIs
Anti-Money Laundering/Countering the Docket FINCEN–2026–0100. under their respective purviews.3 The
Financing of Terrorism Program and GENIUS Act requires that a PPSI ‘‘be
FOR FURTHER INFORMATION CONTACT:
Sanctions Compliance Program treated as a financial institution for
FinCEN: The FinCEN Regulatory
Requirements purposes of the Bank Secrecy Act, and
Support Section by submitting an
AGENCY: Financial Crimes Enforcement inquiry at www.fincen.gov/contact. as such, shall be subject to all Federal
Network, Office of Foreign Assets OFAC: Assistant Director for laws applicable to a financial institution
Control, Treasury. Regulatory Affairs, 202–622–4855 or located in the United States relating to
ACTION: Joint proposed rule. https://ofac.treasury.gov/contact-ofac. economic sanctions, prevention of
SUPPLEMENTARY INFORMATION: money laundering, customer
SUMMARY: The Department of the identification, and due diligence.’’ 4 The
Treasury’s Financial Crimes I. Executive Summary GENIUS Act directs the Secretary of the
Enforcement Network (FinCEN) and Payment stablecoins could Treasury to issue regulations, tailored to
Office of Foreign Assets Control (OFAC) revolutionize payment systems, but the the size and complexity of the PPSI,
are jointly issuing this proposed rule to U.S. financial system’s strength, size, implementing this provision of the
implement provisions of the Guiding and reliability make its payment GENIUS Act.5
and Establishing National Innovation for systems a notable target for misuse by Regarding the BSA and AML, in
U.S. Stablecoins Act (GENIUS Act). illicit actors, which jeopardizes U.S. addition to its clear, general directive
Specifically, it implements the GENIUS national security. To combat illicit that PPSIs be treated as financial
Act’s directive to treat permitted finance risk, this notice of proposed institutions for purposes of the BSA and
payment stablecoin issuers (PPSIs) as rulemaking (NPRM) implements the be subject to ‘‘all Federal laws’’ related
financial institutions for purposes of the GENIUS Act’s directive to subject PPSIs to preventing money laundering, the
Bank Secrecy Act, proposes anti-money to anti-money laundering (AML) GENIUS Act specifies that a PPSI’s
laundering obligations for PPSIs, and requirements, including Bank Secrecy obligations include: (i) maintenance of
proposes certain specific obligations Act (BSA) requirements, and to require an effective AML program, which
required by the GENIUS Act for PPSIs. PPSIs to maintain an effective economic includes appropriate risk assessments
It also implements the GENIUS Act’s sanctions compliance program. and designation of an officer to
directive to require PPSIs to maintain Although issued jointly by FinCEN supervise the program; (ii) retention of
effective sanctions compliance and OFAC, the NPRM outlines appropriate records; (iii) monitoring and
programs. independent changes to two different reporting any suspicious transaction
DATES: Comments must be received by chapters of Title 31 of the Code of relevant to a possible violation of law or
June 9, 2026. Federal Regulations. First, FinCEN is regulation; (iv) maintenance of technical
ADDRESSES: Comments must be proposing changes to its existing capabilities, policies, and procedures to
submitted in one of the following two regulations and creation of a new part
2 See 12 U.S.C. 5901(25), (30); see also 12 U.S.C.
ways (please choose only one of the of chapter X to effectuate the GENIUS
5903(a)(4)(A), 5906(d).
ways listed): Act’s directive to apply BSA and AML 3 12 U.S.C. 5901(25) (defining ‘‘primary Federal
• Electronically at https:// obligations to PPSIs. Second, OFAC is payment stablecoin regulator’’ and outlining
www.regulations.gov. Follow the proposing a new part to chapter V to jurisdiction regarding specific types of PPSIs), 5904
‘‘Submit a comment’’ instructions under effectuate the GENIUS Act’s directive (directing the primary Federal payment stablecoin
that PPSIs maintain an effective regulators to ‘‘establish a process and framework for
Docket FINCEN–2026–0100. If you are the licensing, regulation, examination, and
reading this document on economic sanctions compliance supervision’’ for PPSIs under their respective
federalregister.gov, you may use the program. jurisdictions).
4 12 U.S.C. 5903(a)(5)(A).
green ‘‘SUBMIT A PUBLIC COMMENT’’ II. Statutory Authority 5 12 U.S.C. 5903(a)(5)(B). In addition to
button beneath this rulemaking’s title to
A. The Guiding and Establishing rulemaking authority codified in the ‘‘Treatment
submit a comment to the regulations.gov Under the Bank Secrecy Act and Sanctions Law’’
docket. National Innovation for U.S. Stablecoins section, the GENIUS Act also generally calls for the
• You may mail written comments to Act Secretary of the Treasury to promulgate regulations
‘‘to carry out [the GENIUS Act] through appropriate
lotter on DSK8BHNXB4PROD with PROPOSALS3
the following address: Regulatory and The GENIUS Act provides a notice and comment rulemaking.’’ 12 U.S.C.
Strategic Affairs Division, Financial comprehensive framework for the 5913(a). In accordance with Treasury Order 101–05
Crimes Enforcement Network, P.O. Box regulation of payment stablecoins.1 The and 31 U.S.C. 321(b)(2), the authority vested in the
39, Vienna, VA 22183. Mailed GENIUS Act outlines the reserve, Secretary under the GENIUS Act to issue
comments must be received by the close regulations related to prevention of money
capital, liquidity, and risk management laundering and countering the financing of
of the comment period. terrorism and related to economic sanctions has
Do not include any personally 1 GENIUS Act, Public Law 119–27, 139 Stat. 419 been delegated to the Director of FinCEN and to the
identifiable information (such as name, (2025) (codified at 12 U.S.C. 5901–5916). Director of OFAC, respectively.
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18583
block, freeze, and reject specific or and other illicit finance activity.12 programs; 19 and conduct enhanced due
impermissible transactions that violate Under the BSA, Congress authorized the diligence.20
Federal or State law, rules, or Secretary to impose various obligations
C. Office of Foreign Assets Control
regulations; and (v) maintenance of an on financial institutions, including
Statutory Authority
effective customer identification requiring risk-based programs to prevent
program,6 including identifying and money laundering and the financing of OFAC acts under Presidential
verifying the PPSI’s account holders, terrorism. The BSA also enables the national emergency powers, as well as
high-value transactions, and appropriate Secretary to require financial various statutory authorities, and has
enhanced due diligence.7 The GENIUS institutions to file reports and keep been delegated responsibility by the
Act contains other provisions that records that ‘‘are highly useful’’ Treasury Secretary for developing,
control illicit risk in the payment including ‘‘in criminal, tax, or administering, and enforcing U.S.
stablecoin ecosystem. One of these regulatory investigations, risk economic sanctions. The International
provisions is the requirement that PPSIs assessments, or proceedings,’’ or in the Emergency Economic Powers Act
only issue payment stablecoins if the conduct of ‘‘intelligence or (IEEPA), enacted in 1977, is a key
issuer has the technological capability counterintelligence activities, including authority for imposing economic
to comply and will comply with the analysis, to protect against terrorism.’’ 13 sanctions.21 IEEPA authorizes the
terms of any ‘‘lawful order,’’ which the In order to enable both the public and President to declare a national
GENIUS Act defines, in part, as an order private sectors to identify and stop emergency in response to an unusual or
issued or promulgated by a Federal illicit actors, the BSA also directed the extraordinary threat to the United States
agency or court to seize, freeze, burn, or establishment of appropriate that has its source in whole or
prevent the transfer of payment frameworks for information sharing substantial part outside the United
stablecoins.8 among various actors, including States.22 Upon declaration of a national
Regarding sanctions, the GENIUS Act financial institutions and law emergency, IEEPA authorizes the
expressly subjects PPSIs to ‘‘all Federal enforcement authorities.14 The President to, among other actions,
laws applicable to a financial institution Secretary has delegated the authority to investigate, block, regulate, or prohibit
implement, administer, and enforce the transactions and dealings in property
located in the United States relating to
BSA and its associated regulations to subject to U.S. jurisdiction when a
economic sanctions’’ 9 and requires
the Director of FinCEN.15 foreign national or country has an
PPSIs to maintain ‘‘an effective
interest.23 IEEPA also provides the
economic sanctions compliance Many of the obligations included in President with the authority to issue
program, including verification of the BSA are explicitly included in the regulations as may be necessary to
sanctions lists, consistent with Federal GENIUS Act as obligations imposed on exercise the authorities granted in
law.’’ 10 PPSIs. For example, in both the BSA IEEPA.24 The President typically
This NPRM represents one piece of and the GENIUS Act, Congress delegates the authority to administer
the comprehensive regulatory authorized Treasury to impose economic sanctions pursuant to IEEPA
framework for PPSIs set out in the obligations to maintain effective AML to the Secretary, who redelegates the
GENIUS Act.11 programs; 16 retain records; 17 monitor implementation authority to OFAC.25
B. The Bank Secrecy Act and report suspicious activity; 18 Through the exercise of its delegated
maintain customer identification IEEPA authority and other authorities,
The Bank Secrecy Act, or ‘‘BSA,’’ is OFAC administers and enforces
the common name for a collection of 12 See 31 U.S.C. 5311. Certain parts of the economic sanctions to prohibit certain
statutory authorities designed to Currency and Foreign Transactions Reporting Act, transactions and to block assets under
safeguard the national security of the its amendments, and the other statutes relating to U.S. jurisdiction, including by issuing
United States by combating money the subject matter of that Act, have come to be
referred to as the BSA. These statutes are codified civil money penalties. OFAC sanctions
laundering, the financing of terrorism, at 12 U.S.C. 1829b, 12 U.S.C. 1951–1960, and 31 include sanctions that block the
U.S.C. 5311–5314 and 5316–5336 and notes thereto, property or interests in property of, or
6 The GENIUS Act’s customer identification with implementing regulations at 31 CFR chapter X. prohibit certain transactions or dealings
program requirement is expected to be the subject Consistent with that understood meaning, as
of a separate rulemaking. codified, the GENIUS Act defines the ‘‘Bank with, sanctioned individuals and
7 12 U.S.C. 5903(a)(5)(A)(i)–(v). Secrecy Act’’ to mean ‘‘(A) section 1829b of [title entities, including foreign governments
8 12 U.S.C. 5903(a)(6)(B), 5901(16) (defining 12]; (B) chapter 2 of title I of Public Law 91–508 and officials, terrorists, international
‘‘lawful order’’). (12 U.S.C. 1951 et seq.); and (C) subchapter II of narcotics traffickers, and those engaged
chapter 53 of title 31.’’ 12 U.S.C. 5901(2).
9 12 U.S.C. 5903(a)(5)(A).
13 See 31 U.S.C. 5311(1); see also 5313, 5318(g).
or who have engaged in activities such
10 12 U.S.C. 5903(a)(5)(A)(vi).
14 See 31 U.S.C. 5311(5), 5311 note (‘‘Cooperation as serious human rights abuse,
11 On September 19, 2025, the Department of the
Among Financial Institutions, Regulatory corruption, the proliferation of weapons
Treasury issued an advance notice of proposed
rulemaking concerning the GENIUS Act. See
Authorities, and Law Enforcement Authorities’’); of mass destruction, transnational
see also 31 U.S.C. 310. organized crime, sanctions evasion, or
Treasury, GENIUS Act Implementation, 90 FR 15 See Treasury Order 180–01 (Jan. 14, 2020),
45159 (Sept. 19, 2025); see also FDIC, Approval
para. 3, available at https://home.treasury.gov/
the provision of material support to
Requirements for Issuance of Payment Stablecoins sanctioned individuals and entities.
by Subsidiaries of FDIC-Supervised Insured about/general-information/orders-and-directives/
Depository Institutions, 90 FR 59409 (Dec. 19, treasury-order-180-01; see also 31 U.S.C. OFAC also administers comprehensive
2025); NCUA, Investments in and Licensing of 310(b)(2)(I) (providing that the Director of FinCEN sanctions that broadly prohibit
Permitted Payment Stablecoins Issuers, 91 FR 6531 shall ‘‘[a]dminister the requirements of subchapter
(Feb. 12, 2026); OCC, Implementing the Guiding II of chapter 53 of this title, chapter 2 of title I of
lotter on DSK8BHNXB4PROD with PROPOSALS3
19 See 31 U.S.C. 5318(l); 12 U.S.C.
and Establishing National Innovation for U.S. Public Law 91–508, and section 21 of the Federal
Deposit Insurance Act, to the extent delegated such 5903(a)(5)(A)(v).
Stablecoins Act for the Issuance of Stablecoins by 20 See 31 U.S.C. 5318(i); 12 U.S.C.
Entities Subject to the Jurisdiction of the Office of authority by the Secretary’’).
16 See 31 U.S.C. 5318(h); 12 U.S.C. 5903(a)(5)(A)(v).
the Comptroller of the Currency, 91 FR 10202 (Mar. 21 See 50 U.S.C. 1701 et seq.
2, 2026); Treasury, GENIUS Act Broad-Based 5903(a)(5)(A)(i).
17 See, e.g., 31 U.S.C. 5318(a)(2); 12 U.S.C. 1826b; 22 See 50 U.S.C. 1701.
Principles for Determining Whether a State-Level
23 See 50 U.S.C. 1702.
Regulatory Regime Is Substantially Similar to the 12 U.S.C. 1953; 12 U.S.C. 5903(a)(5)(A)(ii).
18 See 31 U.S.C. 5318(g); 12 U.S.C. 24 See 50 U.S.C. 1704.
Federal Regulatory Framework, 91 FR 16844 (Apr.
3, 2026). 5903(a)(5)(A)(iii). 25 See, e.g., 31 CFR 525.106, 548.802, 591.802.
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
18584 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
transactions and dealings involving an finance risks, improve supervisory Most stablecoins backed by financial
entire country or geographic region or a efficiency, and ultimately strengthen assets, including fiat currency, have
particular sector of a country’s market confidence and U.S. centralized control, meaning that one
economy. competitiveness. company, or a group of companies, are
responsible for governance functions,
III. Advance Notice of Proposed IV. Stablecoin Ecosystem
including defining and ensuring
Rulemaking The GENIUS Act only governs a compliance with standards related to
Treasury issued an advance notice of subcategory of stablecoins, namely the issuance, purchase, redemption,
proposed rulemaking (ANPRM) in ‘‘payment stablecoins’’ as defined by the custody, and transfer of the stablecoin.
September 2025 seeking public GENIUS Act, and a subcategory of actors Generally, a stablecoin issuer will issue
comment on potential Treasury in the payment stablecoin ecosystem, a stablecoin when a user provides the
regulations implementing the GENIUS most critically for this rulemaking, issuer funds denominated in the fiat
Act.26 Pertinent to this proposal, the PPSIs.29 Thus, under the GENIUS Act, currency of the stablecoin’s peg.
ANPRM asked questions related to not all stablecoins are payment Similarly, a stablecoin is redeemed
definitions used in the GENIUS Act; the stablecoins and not all stablecoin when a user exchanges stablecoins with
GENIUS Act’s BSA, AML, and sanctions issuers will be eligible to be PPSIs. the stablecoin issuer for funds valued at
program provisions; and the potential Because the GENIUS Act framework is the corresponding amount of fiat
costs and benefits associated with BSA not yet in place, it is not yet determined currency.
and sanctions obligations.27 which specific stablecoins will be Currently, many stablecoin issuers
In response to this ANPRM, Treasury payment stablecoins and which specific generally interact directly with a small
received approximately 450 timely issuers will be PPSIs. An understanding number of larger companies, which are
comments from a variety of of the stablecoin ecosystem, uses of often institutional participants in the
stakeholders, including banks and credit stablecoins, and risks associated with trading of digital assets (i.e., digital asset
unions, stablecoin issuers, digital asset stablecoins generally informs the exchanges).34 Those companies, in turn,
exchanges, analytics companies, law parameters of the proposed rule, interact with a larger and more diverse
firms, trade associations, non- including the rationale behind certain group of users. Many stablecoin issuers
governmental organizations, technology proposed obligations. predominantly offer issue and
firms, academics, and members of the redemption services to financial
public. Treasury reviewed and A. Overview of Stablecoins and
Stablecoin Issuers institutions, including digital asset
considered the pertinent comments in exchanges that may be regulated under
crafting this proposal. Stablecoins are a blockchain-based 30 the BSA as money services businesses
In general, commenters supported digital asset 31 designed to maintain a (MSBs).35 Generally, once an issuer
applying BSA and sanctions program stable value relative to an underlying issues stablecoins to such financial
obligations to PPSIs. For BSA asset, most often, but not always, a fiat institutions, those institutions put the
obligations, some commenters currency.32 Many stablecoin issuers stablecoins into broader circulation to
advocated these requirements mirror represent that their stablecoin can be other users, such as individual, retail
existing obligations and risk-based redeemed at par upon request, although users. Similarly, individual users
frameworks. Some commenters redemption terms and rights vary by generally do not redeem stablecoins
generally asserted that different stablecoin. The asserted redemption through a stablecoin issuer but rather
obligations should apply with regards to value of a stablecoin is generally tied to interact with a digital asset exchange or
transactions on the primary market the value of the pool of reserve assets platform.36 However, in the future,
versus transactions on the secondary that ‘‘backs’’ the stablecoin.33 issuers could more commonly interact
market.28 On costs and benefits, some directly with retail users, including
commenters acknowledged meaningful 29 See, e.g., 12 U.S.C. 5902, 5903.
issuing and redeeming payment
30 A blockchain is ‘‘any technology where data is:
upfront costs associated with complying stablecoins.
(i) shared across a network to create a public ledger
with the BSA, sanctions program of verified transactions or information among Most stablecoin issuers use smart
obligations, and the GENIUS Act, network participants; (ii) linked using cryptography contracts 37 to issue stablecoins, enable
particularly for new or unregulated to maintain the integrity of the public ledger and
entrants, but also stated that clearer to execute other functions; (iii) distributed among that may back different forms of stablecoins include
network participants in an automated fashion to
rules would lower long-term concurrently update network participants on the
digital assets, precious metals, or corporate bonds
compliance friction, reduce illicit with lower credit ratings. See id.
state of the public ledger and any other functions; 34 See Watsky, Cy, et al., Primary and Secondary
and (iv) composed of source code that is publicly Markets for Stablecoins, FEDS Notes, Washington:
26 GENIUS Act Implementation, 90 FR 45159. The available.’’ See Executive Order (E.O.) 14178, Board of Governors of the Federal Reserve System
ANPRM solicited comment on a range of potential Strengthening American Leadership in Digital (Feb. 23, 2024), available at https://doi.org/
Treasury efforts related to the GENIUS Act and Financial Technology, 90 FR 8647, sec. 2(b) (Jan. 10.17016/2380-7172.3447.
payment stablecoins that are outside the purview of 31, 2025). 35 See id.; see also E.O. 14178 Report, supra note
31 For this proposed rule, a ‘‘digital asset’’ is ‘‘any
this rulemaking. For example, the ANPRM included 32, pp. 104–05.
questions related to the GENIUS Act prohibition on digital representation of value that is recorded on 36 See, e.g., E.O. 14178 Report, supra note 32, p.
digital asset service providers offering and selling a cryptographically secured distributed ledger.’’ See 18.
a payment stablecoin to any person in the United 12 U.S.C. 5901(6). 37 A smart contract is a ‘‘collection of code and
States unless the payment stablecoin is issued by 32 White House, Strengthening American
data . . . that is deployed using cryptographically
a PPSI or a foreign payment stablecoin issuer that Leadership in Digital Financial Technology, p. 88 signed transactions’’ on a blockchain network,
meets certain requirements. Id. at 45160–61. It also (July 2025) [hereinafter E.O. 14178 Report], which is executed by nodes on a blockchain to
included questions related to Treasury’s role in available at https://www.whitehouse.gov/wp-
lotter on DSK8BHNXB4PROD with PROPOSALS3
perform any given set of pre-determined functions
determining whether a state-level regulatory regime content/uploads/2025/07/Digital-Assets-Report- or conditions that are recorded on a blockchain. See
is substantially similar to the Federal framework EO14178.pdf. This report was issued by the National Institute of Standards and Technology
and whether a foreign country’s regulatory and President’s Working Group on Digital Asset (NIST), NISTIR 8202, Blockchain Technology
supervisory regime is comparable to the U.S. Markets, of which the Secretary is a member, Overview, p. 32 (Oct. 2018), available at https://
framework. Id. at 45162–63. pursuant to E.O. 14178. nvlpubs.nist.gov/nistpubs/ir/2018/NIST.IR.8202.pdf
27 Id. at 45161–63. 33 See id. at p. 90. As discussed in the E.O. 14178
(‘‘A smart contract can perform calculations, store
28 See infra section IV.C discussing the meaning Report, as of July 2025, more than 99 percent of the information, expose properties to reflect a publicly
of primary and secondary market for purposes of outstanding value of stablecoins in circulation is exposed state and, if appropriate, automatically
this rulemaking. pegged to the U.S. dollar. Id. Other types of assets send funds to other accounts.’’).
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18585
or prohibit subsequent transactions in trillions of dollars of payments daily.41 to the transaction other than via a smart
the stablecoin, and redeem stablecoins. Although innovations like real-time contract. For example, secondary market
The smart contracts underlying most payment networks 42 decrease activity could include an individual
stablecoins maintain a ledger of the settlement times, particularly for purchasing payment stablecoins from an
number of stablecoins ‘‘owned by a set domestic transfers, cross-border intermediary, an individual sending
of accounts where each account is payments through traditional payment payment stablecoins from a self-hosted
owned by a blockchain address’’ or mechanisms remain more costly and wallet to a vendor to purchase goods, an
wallet.38 Smart contracts generally slower.43 Innovation in cross-border individual exchanging payment
allow for programmability that can payments could support economic stablecoins for another digital asset via
enable a stablecoin issuer to maintain growth, including by facilitating a digital asset exchange, or person-to-
control over and alter the use of its international trade. Payment stablecoins person transactions in payment
stablecoin. may be able to mitigate some of the stablecoins.
In the current environment, control challenges individuals and small
D. Illicit Finance Risks Associated With
capabilities vary depending on how the businesses face in navigating cross-
Stablecoins
stablecoin issuer designed the border payments by increasing speed,
stablecoin, including the associated decreasing cost, and enabling The liquidity and stability of
smart contract and the blockchain on transactions with fewer stablecoins relative to other digital
which the smart contracts are deployed. intermediaries.44 assets and rapid settlement of
For example, a stablecoin issuer may be stablecoins make them appealing to
C. Payment Stablecoin Activity illicit actors as well as legitimate
able to prohibit specific wallet
addresses from interacting with the Due to the use of smart contracts users.46 As a result, in general, illicit
stablecoin and its smart contract. underlying stablecoin transactions and actors have increasingly used
Applying such controls to a particular how users interact with stablecoin stablecoins to facilitate transactions and
wallet address would effectively prevent issuers, the ecosystem can, broadly store proceeds.47 The illicit finance risks
the holder of a stablecoin from speaking, be divided into two discussed below related to stablecoins
transferring, redeeming, or otherwise components, the primary market and are likely to generally also apply to
moving the stablecoin. Additionally, the secondary market. For the purposes payment stablecoins, particularly
some stablecoin issuers can send of this rulemaking, FinCEN and OFAC because the most prolific stablecoins
stablecoins in circulation to an use these terms to help describe carry indicators they could be payment
unrecoverable wallet address, categories of payment stablecoin activity stablecoins.
commonly referred to as ‘‘burning,’’ and articulate the parameters of The U.S. government has linked
effectively removing the stablecoins particular obligations. stablecoins to a range of illicit activities
from a given wallet and from circulation FinCEN and OFAC will use the term and bad actors, including scammers and
in general.39 In some cases, including ‘‘primary market’’ to generally describe fraudsters; 48 Democratic People’s
when required by a lawful order, a PPSI interacting directly with a user Republic of Korea (DPRK) information
stablecoin issuers reissue stablecoins or holder of a payment stablecoin, such technology (IT) workers, cybercriminal
equivalent to burned or frozen funds to as when a PPSI engages in issuing, groups and related money laundering
different wallets as part of efforts to converting, redeeming, repurchasing, networks; 49 drug traffickers; 50 terrorist
recover and return funds to victims of burning, and reissuing payment
criminal activity. stablecoins, as well as providing 46 See Treasury, 2026 National Money Laundering
associated services, such as providing Risk Assessment, p. 50 (Mar. 2026) [hereinafter
B. Stablecoin Use Cases custodial services.45 Generally speaking,
2026 NMLRA], available at https://
home.treasury.gov/system/files/246/2026-
Currently, most stablecoin users primary market activity will involve NMLRA.pdf; E.O. 14178 Report, supra note 32, p.
primarily rely on stablecoins to store activity where a PPSI and a user have 94.
47 See 2026 NMLRA, supra note 46, p. 50.
value, facilitate trades in other digital a relationship or direct interaction
48 See, e.g., Compl., United States v.
assets, or to interact with smart beyond the involvement of a PPSI’s
Approximately 225,364,961 USDT, No. 25–cv–1907
contracts. Payment stablecoins could, smart contract (e.g., the PPSI’s (D.D.C. June 18, 2025) (civil forfeiture action against
however, become a more widely maintenance of an account through more than $225.3 million in stablecoins allegedly
adopted form of payment.40 U.S. which the transactions of such user or involved in concealing proceeds of digital assets
consumers and businesses process customer may be effectuated). investment fraud); United States v. Su, No. 25–cr–
362 (C.D. Cal. Jan. 27, 2026) (defendant sentenced
FinCEN and OFAC will use the term to 46 months in prison for role in digital investment
38 NIST, NISTIR 8408, Understanding Stablecoin ‘‘secondary market’’ to describe scam involving $36.9 million where victim funds
Technology and Security Considerations, p. 6 (Sept. payment stablecoin activity that does were converted to stablecoins).
2023), available at https://nvlpubs.nist.gov/ not directly involve the PPSI as a party 49 See, e.g., Indictment, United States v. Sop, No.
nistpubs/ir/2023/NIST.IR.8408.pdf. The lynchpin of 23–cr–128 (D.D.C. Mar. 18, 2023) (indictment
a blockchain is asymmetric (public key) alleging defendant laundered proceeds of DPRK IT
41 Id. at p. 88.
cryptography, which is used to secure and send workers in violation of sanctions, including through
42 See id. at p. 89; see, e.g., Fed. Reserve, About
transactions on a blockchain. See Blockchain use of stablecoins); DOJ, Press Release, Department
Technology Overview, supra note 37, p. 11. First, the FedNow Service (n.d.), available at https:// Files Civil Forfeiture Complaint Against Over
a user generates a private key (a string of characters www.frbservices.org/financial-services/fednow/ $7.74M Laundered on Behalf of the North Korean
that function like a password) and uses that private about.html. Government (June 5, 2025), available at https://
key to generate a public key (an account number on 43 See E.O. 14178 Report, supra note 32, p. 88.
www.justice.gov/opa/pr/department-files-civil-
a blockchain known as an address). Without the 44 See id. at pp. 90–91. forfeiture-complaint-against-over-774m-laundered-
lotter on DSK8BHNXB4PROD with PROPOSALS3
private key associated with an address or public 45 If consistent with the law and authorized by a behalf-north-korean; United States of America v.
key, a user cannot access the digital assets primary Federal payment stablecoin regulator or the Approximately 1,159,834.52 USDT, No. 25–cv–
contained within. Developers have created software State payment stablecoin regulator, as applicable, 3771 (D.D.C. Oct. 24, 2025) (civil forfeiture
or hardware wallets to enable users to manage their PPSIs can also engage in activities as a ‘‘digital asset complaint of stablecoins related to virtual currency
public and private keys. See E.O. 14178 Report, service provider,’’ as defined by the GENIUS Act, heists perpetrated by DPRK hacking groups).
supra note 32, pp. 9–10. and activities incidental thereto. Such activities 50 See, e.g., United States v. Zhang et al., No. 22–
39 Understanding Stablecoin Technology and
include exchanging and transferring digital assets. cr–10279 (Aug. 15, 2025) (defendants sentenced to
Security Considerations, supra note 38, p. 8. See 12 U.S.C. 5903(a)(7)(B), 5901(7). Such activity prison in connection with drug trafficking scheme
40 See E.O. 14178 Report, supra note 32, p. 91. would also constitute primary market activity. Continued
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00005 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
18586 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
groups; 51 and sanctions evasion and with stablecoin issuers to convert funds launder illicit proceeds.61 The United
money laundering networks; 52 among on behalf of their customers from local States government has sought seizure of
others. Between January 1, 2015, and currencies into stablecoins, which can substantial amounts of stablecoin,
November 21, 2025, FinCEN received then be laundered and ultimately including the $225 million forfeiture
approximately 55,000 suspicious exchanged for U.S. dollars. pursued by the Department of Justice as
activity reports (SARs) that referenced discussed above 62 and a $61 million
one or more specific stablecoins in the 1. Laundering of Illicit Proceeds
seizure,63 in connection with
narrative, as well as an additional Illicit actors have turned to investigations into such schemes.
approximately 8,400 reports that stablecoins to launder illicit proceeds in Perpetrators and facilitators of such
included a general reference to the term part because, relative to other digital scams may solicit and receive victim
‘‘stablecoin.’’ Also, between January 1, assets, they are more stable and have funds in financial accounts under their
2015, and November 21, 2025, OFAC better liquidity.55 Some facilitators control, convert those funds to
received approximately 5,800 reports on involved in exchanging illicit proceeds stablecoins, and then distribute those
blocked property and 3,000 reports on in digital assets for fiat currency request stablecoins to co-conspirator-controlled
rejected transactions that referenced one stablecoins instead of other digital digital asset wallets.64
or more specific stablecoins in the assets.56
narrative, as well as approximately six At times, stablecoins are one element ii. Terrorist Financing and Weapons
reports that included a general reference of a complex money laundering process Proliferation
to the term ‘‘stablecoin’’. Furthermore, that may include the use of digital asset Certain terrorist groups, such as the
the Financial Action Task Force noted exchanges, conversion between Islamic State of Iraq and Syria-Khorasan
in 2025 that ‘‘[e]stimates suggest that a stablecoins and other digital assets, and (ISIS–K) and Hamas, use various types
majority of all on-chain illicit activity is transfers between wallets not hosted by of digital assets, including stablecoins.65
now transacted in stablecoins,’’ aligning a financial institution.57 For example, in In some instances, terrorist
with the trend of overall growth in June 2025, DOJ filed a civil forfeiture organizations generate revenue in digital
stablecoin adoption.53 complaint against more than $225.3 assets, including stablecoins, through
Some illicit transactions leveraging million in stablecoins, alleging that the online donation drives.66 One long-
stablecoins involve one or more addresses holding those stablecoins running online ISIS–K fundraiser, for
financial institutions, such as a digital were part of a sophisticated money example, collected $2 million in
asset exchange, that are subject to U.S. laundering network that executed stablecoins in 2022.67 Terrorist groups
anti-money laundering and countering hundreds of thousands of transactions
the financing of terrorism (AML/CFT) and were used to conceal the nature, 61 Id. at p. 5, 52.
obligations. In other instances, however, source, control, and ownership of 62 See Largest Ever Seizure of Funds Related to
stablecoin holders conduct transactions proceeds derived from digital asset Crypto Confidence Scams, supra note 58.
63 See, e.g., DOJ, Press Release, U.S. Attorney’s
on the secondary market without an investment fraud.58 Office EDNC Announces Seizure of $61 Million
intermediary (i.e., person-to-person) or Stablecoins may also appeal to illicit Dollars’ Worth of Cryptocurrency, (Feb. 24, 2026),
through foreign digital asset exchanges laundering networks because they available at https://www.justice.gov/usao-ednc/pr/
in jurisdictions with inadequate or no enable actors to rapidly move large us-attorneys-office-ednc-announces-seizure-61-
AML/CFT obligations for such actors.54 million-dollars-worth-cryptocurrency; see also DOJ,
amounts of value around the globe.59 Press Release, Ohio Woman Loses Life Savings in
BSA data indicates that financial Chinese money laundering networks, Cryptocurrency Investment Scam (Feb. 28, 2025),
services providers in jurisdictions with which serve as the dominant available at https://www.justice.gov/usao-ndoh/pr/
lax AML/CFT standards use accounts professional money laundering ohio-woman-loses-life-savings-cryptocurrency-
investment-scam (discussing seizure of $8.2 million
networks for drug trafficking and in stablecoins); see also DOJ, Press Release, Cyber
involving conversion of proceeds to stablecoins);
see also, DOJ, Press Release, Two Men Sentenced
transnational criminal organizations, are Scam Organization Disrupted Through Seizure of
for Role in International Money Laundering and also increasingly exchanging illicit Nearly $9M in Crypto (Nov. 21, 2023), available at
Drug Trafficking Conspiracy (Aug. 15, 2025), proceeds in the form of U.S. dollars for https://www.justice.gov/usao-ndca/pr/cyber-scam-
available at https://www.justice.gov/usao-ma/pr/ organization-disrupted-through-seizure-nearly-9m-
digital assets, particularly stablecoins, crypto.
two-men-sentenced-role-international-money-
laundering-and-drug-trafficking-conspiracy. in part to avoid large intra-China bank 64 See, e.g., Judgment, United States v. Li, 2:23–
51 See, e.g., DOJ, Press Release, Justice transfers that may raise capital flight cr–596 (C.D. Cal. Feb. 10, 2026) (defendant
Department Disrupts Hamas Terrorist Financing suspicions.60 sentenced to 240 months); see also DOJ, Press
Scheme Through Seizure of Cryptocurrency (Mar. Release, Man Sentenced to 20 Years in Prison for
27, 2025), available at https://www.justice.gov/opa/ 2. Illicit Uses of Payment Stablecoins role in $73 Million Global Cryptocurrency
pr/justice-department-disrupts-hamas-terrorist- Investment Scam (Feb. 9, 2026), available at https://
financing-scheme-through-seizure-cryptocurrency; i. Scams and Fraud www.justice.gov/archives/opa/pr/foreign-national-
United States of America v. Nine Cryptocurrency pleads-guilty-laundering-millions-proceeds-
Wallets Held by Tether Ltd. and Seven
Perpetrators of scams and other fraud cryptocurrency-investment-scams. See Plea, United
Cryptocurrency Wallets Held by Binance Holdings schemes—most notably digital asset States v. He, 2:25–cr–175 (C.D. Cal. Apr 7, 2025);
Ltd., No. 24–cv–01251 (D.D.C. Nov. 13, 2025) investment scams—use digital assets, see also DOJ, Press Release, California Man
(involving a civil forfeiture of approximately $2 including stablecoins, to generate and Sentenced for Role in Global Digital Asset
million dollars in digital currency connected to a Investment Scam Conspiracy Resulting in Theft of
Gaza-based money transfer business that was More than $36.9M from Victims (Sept. 8, 2025),
55 2026 NMLRA, supra note 46, p. 52.
involved in financially supporting Hamas). available at https://www.justice.gov/opa/pr/
56 Id.
52 Treasury, Press Release, Treasury Exposes california-man-sentenced-role-global-digital-asset-
57 Id. investment-scam-conspiracy-resulting.
Money Laundering Network Using Digital Assets to
58 DOJ, Press Release, Largest Ever Seizure of 65 Treasury, 2026 National Terrorist Financing
Evade Sanctions (Dec. 4, 2024), available at https://
lotter on DSK8BHNXB4PROD with PROPOSALS3
home.treasury.gov/news/press-releases/jy2735. Funds Related to Crypto Confidence Scams (June Risk Assessment, p. 19 (Mar. 2026) [hereinafter
53 Financial Action Task Force (FATF), Targeted 18, 2025), available at https://www.justice.gov/usao- 2026 NTFRA], available at https://
Update on Implementation of the FATF Standards dc/pr/largest-ever-seizure-funds-related-crypto- home.treasury.gov/system/files/246/2026-
on Virtual Assets and Virtual Assets Service confidence-scams. NTFRA.pdf.
Providers, ¶ 35 (June 2025), available at https:// 59 International Monetary Fund, Understanding 66 See, e.g., Justice Department Disrupts Hamas
www.fatf-gafi.org/content/dam/fatf-gafi/ Stablecoins, p. 30 (2025), available at https:// Terrorist Financing Scheme Through Seizure of
recommendations/2025-Targeted-Upate-VA- www.imf.org/-/media/files/publications/dp/2025/ Cryptocurrency, supra note 51.
VASPs.pdf.coredownload.pdf. english/usea.pdf. 67 United Nations Security Council Counter
54 Id. 60 2026 NMLRA, supra note 46, p. 26. Terrorism Committee Executive Directorate,
VerDate Sep<11>2014 19:40 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18587
soliciting donations of digital assets turn from drug sales in the United States; indictment against two Garantex
to stablecoins to avoid the volatility and exchange the cash for digital assets, operators, Garantex, beginning in and
price fluctuations that impact other including stablecoins; and send the around early 2023, maintained at least
digital assets and to facilitate more digital assets to wallets controlled by some of its operational accounts in
seamless conversion to fiat currency.68 brokers or co-conspirators.72 According stablecoins.78 The operators allegedly
Terrorist organizations have also to DOJ, in some instances, the digital moved the exchange’s operational
utilized stablecoins as a means of assets are then converted into cash and wallets storing stablecoins to a new
transferring funds. For example, DOJ delivered to cartel leaders in Mexico digital asset wallet on a daily basis to
unsealed a civil forfeiture action in July and Colombia.73 In November 2024 for evade detection by blockchain analytics
2025 against approximately $2 million instance, DOJ filed a civil forfeiture services.79
worth of digital assets connected with a complaint against more than $5.5 The U.S. government has pursued
Gaza-based money transfer business that million in stablecoins allegedly cases involving DPRK IT workers and
was involved in financially supporting involved in a money laundering co-conspirators involved in money
Hamas. The complaint describes a operation related to drug trafficking.74 laundering alleged to have leveraged
detailed scheme whereby users utilized stablecoins as part of schemes to evade
the money transfer business to fund 3. Sanctions Evasion
sanctions and generate revenue for the
accounts at a digital asset exchange and Sanctions evasion and money DPRK regime, in part because they
to fund wallet addresses containing laundering networks have leveraged found stablecoins susceptible to
stablecoins to obfuscate their financial stablecoins to move funds on behalf of laundering. For example, in June 2025,
support of international terrorist numerous sanctioned actors, including a forfeiture complaint alleged that the
organizations, including Hamas.69 Russian elites, sanctioned digital asset DPRK government generated digital
Iran has increasingly turned to digital exchanges, the DPRK government, assets, in part, through remote work
assets to conduct illicit financial Iranian actors, foreign terrorist done by DPRK IT workers deployed
activity, obtain drone components and organizations, and global terrorists. For around the globe.80 The complaint also
other high-tech equipment, accept example, in December 2024, OFAC alleges that DPRK IT workers requested
payments for weapons, and transfer designated as Specially Designated to be paid in stablecoins because they
funds to sanctioned actors in the region. Nationals (SDNs) five individuals and (and their alleged money laundering co-
Iranian illicit actors often prefer four entities that are associated with or conspirators) retain a consistent value
stablecoins over other digital assets for leverage the TGR Group, a sprawling and can more easily trade stablecoins
these transactions due to stablecoins’ international network of businesses and for fiat currency.81
superior ability to finance international employees that works to obfuscate the The U.S. government has identified
trade.70 illicit activities of its clients, which the use of stablecoin connected to
include sanctioned Russian elites, Iranian actors’ provision of material
iii. Narcotics Production and Trafficking including by facilitating exchanges of support to the Iranian Revolutionary
Transnational criminal organizations bulk cash for stablecoins. 75
Guard Corps (IRGC). For example, in
(TCOs) also use stablecoins to procure Additionally, in August 2025, OFAC September 2025, DOJ filed a civil
components for the manufacturing of redesignated as an SDN Garantex forfeiture action to recover
illegal drugs and to launder the Europe OU (Garantex), a virtual approximately $584,741 in stablecoins
proceeds of illegal drug sales. For currency exchange that directly alleged to be the property of Mohammad
example, Mexico-based drug cartels are facilitated notorious ransomware actors Abedininajafabadi or of his company,82
increasingly purchasing fentanyl and other cybercriminals by processing who was charged with conspiring to
precursor chemicals and manufacturing over $100 million in transactions linked export sophisticated electronic
equipment from People’s Republic of to illicit activities since 2019. 76
components from the United States to
China-based suppliers using digital Garantex was originally designated as Iran in violation of U.S. export control
assets, including stablecoins.71 an SDN in April 2022. According to an and sanctions laws.83 Additionally, in
77
Additionally, prosecutors have charged sanctions actions targeting Iran’s IRGC-
72 See, e.g., Superseding Indictment, United
that, in some cases, TCOs use money Quds Force-backed Ansarallah (Houthi)
States v. Duarte et al., No. 24–cr–20367 (S.D. Fla.
brokers to pick up bulk cash derived Nov. 19, 2024). operatives, OFAC has identified digital
73 Id. asset wallet addresses that have been
Evolving Trends in the Financing of Foreign
Terrorist Fighters’ Activity, 2014–2024, p. 11 (Nov.
74 Compl. United States v. Approximately
used by the Houthis to transfer funds
114,366.044785 Tether (USDT) Cryptocurrency
2024), available at https://www.un.org/ from Binance Account User ID Ending in 7382, No. 78 Indictment ¶ 29, United States v. Besciokov
securitycouncil/ctc/sites/ 24–cv–01503, (E.D. Wisc. Nov. 20, 2024); see also
www.un.org.securitycouncil.ctc/files/cted_trends_ Decision and Order, United States v. Approximately and Mira Serda, No. 25–cr–39, (E.D. Va. Feb. 27,
tracker_evolving_trends_in_the_financing_of_ 114,366.044785 Tether (USDT) Cryptocurrency 2025), https://www.justice.gov/opa/media/1392316/
foreign_terrorist_fighters_activity_2014_-_2024. from Binance Account User ID Ending in 7382, No. dl.
68 2026 NTFRA, supra note 65, p. 26. 79 Id.
24–cv–01503, (E.D. Wisc. Feb. 6, 2026) (default
80 Compl. ¶¶ 48–49, United States v. Virtual
69 See Justice Department Disrupts Hamas judgment ordering assets to be forfeited).
Terrorist Financing Scheme Through Seizure of 75 Treasury, Press Release, Treasury Exposes Currency Associated with North Korean IT Worker
Cryptocurrency, supra note 51. Money Laundering Network Using Digital Assets to Money Laundering and Sanctions Evasion
70 FATF, Targeted Report on Stablecoins and Evade Sanctions (Dec. 4, 2024), available at https:// Conspiracies, No. 25–cv–1769, (D.D.C. June 5,
Unhosted Wallets: Peer-to-Peer Transactions, ¶ 36 home.treasury.gov/news/press-releases/jy2735. 2025).
76 Treasury, Press Release, Treasury Sanctions 81 Id. at ¶¶ 50, 59.
(Mar. 2025), available at https://www.fatf-gafi.org/
content/dam/fatf-gafi/publications/targeted-report- Cryptocurrency Exchange and Network Enabling 82 DOJ, Press Release, United States Seeks Civil
lotter on DSK8BHNXB4PROD with PROPOSALS3
on-stablecoins-and-unhosted- Sanctions Evasion and Cyber Criminals (Aug. 14, Forfeiture of Cryptocurrency Associated with
wallets.pdf.coredownload.inline.pdf. 2025), available at https://home.treasury.gov/news/ Iranian National Mohammad Abedini (Sept. 11,
71 FinCEN, Supplemental Advisory on the press-releases/sb0225. 2025), available at https://www.justice.gov/usao-
Procurement of Precursor Chemicals and 77 Treasury, Press Release, Treasury Sanctions ma/pr/united-states-seeks-civil-forfeiture-
Manufacturing Equipment Used for the Synthesis of Russia-Based Hydra, World’s Largest Darknet cryptocurrency-associated-iranian-national-
Illicit Fentanyl and Other Synthetic Opioids, p. 9 Market, and Ransomware-Enabling Virtual mohammad.
(June 20, 2024), available at https://www.fincen.gov/ Currency Exchange Garantex (Apr. 05, 2022), 83 Compl., United States v. Sadeghi and
system/files/advisory/2024-06-20/FinCEN- available at https://home.treasury.gov/news/press- Abedininajafabadi, No. 24–cr–10391 (D. Mass. Dec.
Supplemental-Advisory-on-Fentanyl-508C.pdf. releases/jy0701. 13, 2024).
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
18588 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
associated with their activities. Many of FinCEN’s regulations define ‘‘money in many respects, FinCEN expects that
the identified wallet addresses have services business,’’ one category of the proposed requirements for PPSIs
been used to transact stablecoins.84 which is a ‘‘money transmitter’’ that would be comparable to stablecoin
Furthermore, on January 30, 2026, ‘‘provides money transmission issuers’ existing requirements as MSBs.
OFAC designated as SDNs two UK- services.’’ 88 ‘‘Money transmission
based exchanges with connections to services’’ is in turn defined as ‘‘the B. Existing Sanctions Obligations
notorious Iranian financier Babak acceptance of currency, funds, or other The GENIUS Act provides that PPSIs
Zanjani.85 These exchanges processed value that substitutes for currency from are persons 97 formed in the United
approximately $1 billion in funds one person and the transmission of States 98 and that PPSIs shall be subject
linked to the IRGC. One of the currency, funds or other value that to ‘‘all Federal laws applicable to a
designated exchanges, Zedxion substitutes for currency to another
financial institution located in the
Exchange, Ltd., issued a stablecoin.86 location or person by any means.’’ 89
United States relating to economic
‘‘Value that substitutes for currency’’
V. Existing Regulatory Framework for sanctions.’’ 99 Because the GENIUS Act
includes ‘‘virtual’’ currencies (also
Stablecoin Issuers requires PPSIs to be formed in the
called convertible virtual currencies or
United States, PPSIs will be ‘‘U.S.
A. Existing Bank Secrecy Act ‘‘CVCs’’), such as stablecoins, that either
Obligations persons’’ under existing OFAC
have an equivalent value in real
regulations 100 once the Act takes
Currently, stablecoin issuers generally currency or act as a substitute for real
currency.90 FinCEN has further clarified effect.101 Therefore, stablecoin issuers
are subject to BSA obligations as qualifying as PPSIs will be subject to the
financial institutions, specifically that, unless a limitation or exception
applies, persons engaged in issuing and same U.S. sanctions obligations that
money transmitters, which are a type of currently apply to all other U.S.
MSB. The BSA statutory definition of redeeming a virtual currency (i.e.,
‘‘administrators’’) are money persons, including those that are
‘‘financial institution’’ includes a stablecoin issuers.
‘‘person who engages as a business in transmitters and thus subject to BSA
the transmission of currency, funds, or obligations as MSBs.91 Stablecoin As discussed in section II.C, U.S.
value that substitutes for currency.’’ 87 issuers are, thus, money transmitters sanctions require U.S. persons,
because they, for example, issue and including U.S. person stablecoin
84 See, e.g., Treasury, Press Release, Treasury redeem virtual currencies and accept issuers, to block the property and
Sanctions Houthi Network Procuring Weapons and and transmit value that substitutes for interests in property of blocked persons
Commodities from Russia (Apr. 2, 2025), available currency when issuing and converting, that are in their possession or control
at https://home.treasury.gov/news/press-releases/ redeeming, or repurchasing stablecoins. and report them to OFAC. This blocking
sb0068; Treasury, Counter Terrorism Designations
and Designation Update; Russia-related As MSBs, stablecoin issuers are prohibition requires U.S. persons,
Designation Removal; Reports for Licensing currently subject to a range of BSA including those that are stablecoin
Activities Undertaken Pursuant to the Trade obligations. MSBs are required to, for issuers, to ensure that property and
Sanctions Reform and Export Enhancement Act instance: (i) establish written AML
(TSRA) (Apr. 2, 2024), available at https://
interests in property of such blocked
ofac.treasury.gov/recent-actions/20250402. programs; 92 (ii) file currency persons, including stablecoins, that are
85 Treasury, Press Release, Treasury Sanctions transaction reports (CTRs) 93 and in their possession or control are not
Iranian Regime Officials for Violent Repression and SARs; 94 and (iii) maintain certain transferred, withdrawn, or otherwise
Corruption (Jan. 30, 2026), available at https:// records, including those relating to dealt in, unless authorized by OFAC or
home.treasury.gov/news/press-releases/sb0375. certain transmittals of funds.95 MSBs are
86 See TRM Labs, How Two UK-registered exempt. More broadly, U.S. persons,
Companies Moved Over a Billion in Stablecoins for
subject to examination for BSA including those that are stablecoin
the IRGC (Jan. 9, 2026), available at https:// compliance by the Internal Revenue issuers, are also generally prohibited
www.trmlabs.com/resources/blog/how-two-uk- Service (IRS) under a delegation of from engaging in most transactions with
registered-companies-moved-over-a-billion-in- authority by FinCEN.96
stablecoins-for-the-irgc.
blocked persons, including making any
87 31 U.S.C. 5312(a)(2)(J), 5312(a)(2)(R) (defining,
As required by the GENIUS Act, contribution or provision of funds,
in part, a ‘‘financial institution’’ a ‘‘business
FinCEN is proposing certain obligations goods, or services to or for the benefit
engaged in the exchange of currency, funds, or that differ in some material respects of blocked persons or receiving any
value that substitutes for currency or funds,’’ or ‘‘a from current obligations that stablecoin contribution or funds, goods, or services
licensed sender of money or any other person who issuers are subject to as MSBs, as well
engages as a business in the transmission of from blocked persons, unless authorized
currency, funds, or value that substitutes for
as some PPSI-specific obligations by OFAC or exempt. Blocked persons
currency’’). As part of the AML Act, Congress required by the GENIUS Act. However, subject to these restrictions include
amended 31 U.S.C. 5312 to add this ‘‘value that individuals and entities listed on
substitutes for currency’’ language. See Public Law CVC Guidance], available at https://
116–283, sec. 6102(d), 134 Stat. 4547 (2021). In the www.fincen.gov/resources/statutes-regulations/
OFAC’s Specially Designated Nationals
AML Act, Congress also reaffirmed FinCEN’s guidance/application-fincens-regulations-certain- and Blocked Persons List (‘‘SDN
existing regulatory framework applying MSB business-models.
obligations to persons engaged in certain activities 88 31 CFR 1010.100(ff)(5).
97 12 U.S.C. 5901(24) (defining a ‘‘person’’ as ‘‘an
related to ‘‘value that substitutes for currency,’’ 89 31 CFR 1010.100(ff)(5)(i)(A) (emphasis in
individual, partnership, company, corporation,
including the issuing and redeeming of virtual original). association, trust, estate, cooperative organization,
currencies. See FinCEN, Bank Secrecy Act 90 2013 CVC Guidance, supra note 87, p 3.
or other business entity, incorporated or
Regulations; Definitions and Other Regulations 91 See id. at p. 2 (concluding administrators are unincorporated’’).
Relating to Money Services Businesses, 76 FR
generally MSBs and stating that ‘‘An administrator 98 12 U.S.C. 5901(23) (defining a ‘‘permitted
43585, 43586 (July 21, 2011); see also FinCEN
is a person engaged as a business in issuing (putting payment stablecoin issuer’’ as ‘‘a person formed in
Guidance, FIN–2013–G001, Application of
lotter on DSK8BHNXB4PROD with PROPOSALS3
into circulation) a virtual currency, and who has the the United States that is—(A) a subsidiary of an
FinCEN’s Regulations to Persons Administering,
authority to redeem (to withdraw from circulation) insured depository institution that has been
Exchanging, or Using Virtual Currencies (Mar. 18,
such virtual currency’’); see also 2019 CVC approved to issue payment stablecoins under 12
2013) [hereinafter 2013 CVC Guidance], available at Guidance, supra note 87, p. 13.
https://www.fincen.gov/resources/statutes- U.S.C. 5904; (B) a Federal qualified payment
92 See 31 CFR 1022.210.
regulations/guidance/application-fincens- stablecoin issuer; or (C) a State qualified payment
regulations-persons-administering; FinCEN, FIN–
93 See 31 CFR 1022.310. stablecoin issuer’’).
94 See 31 CFR 1022.320. 99 See 12 U.S.C. 5903(a)(5)(A).
2019–G001, Application of FinCEN’s Regulations to
95 See 31 CFR 1022.400, 1010.410(e)–(f). 100 See, e.g., 31 CFR 510.326, 555.313, 583.314.
Certain Business Models Involving Convertible
Virtual Currencies (May 9, 2019) [hereinafter 2019 96 See 31 CFR 1010.810(b)(8). 101 See 12 U.S.C. 5901(23).
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18589
List’’).102 In addition, any entities that Iran, and Crimea, unless authorized by did not know or have reason to know
are owned, directly or indirectly, OFAC or exempt.105 In cases where an that it was engaging in a prohibited
individually or in the aggregate, 50 underlying transaction is prohibited but transaction.
percent or more by one or more blocked there is no blockable interest, all U.S. As a general matter, however, OFAC
persons are also blocked and subject to persons, including those that are also takes into consideration the totality
the above restrictions, even if they are stablecoin issuers, are required to reject of facts and circumstances surrounding
not specifically named on OFAC’s SDN such transactions and report them to an apparent violation to determine the
List.103 OFAC. For example, U.S. sanctions appropriate enforcement response.
There are a variety of scenarios where against Iran generally prohibit U.S. OFAC’s Economic Sanctions
these prohibitions apply to U.S. person persons from directly or indirectly Enforcement Guidelines, 31 CFR part
stablecoin issuers. For example, U.S. providing services to persons in Iran, 501, Appendix A (‘‘Enforcement
person stablecoin issuers are generally unless otherwise authorized or Guidelines’’), lay out a set of 11 factors
prohibited from engaging in primary exempt.106 Accordingly, U.S. person that OFAC will generally consider in
market activities with blocked persons, stablecoin issuers are generally determining the appropriate
such as issuing stablecoins to blocked prohibited from engaging in primary or administrative action in response to an
persons or redeeming stablecoins secondary market activities with apparent violation of U.S. sanctions,
belonging to blocked persons; such persons in Iran, including issuing including the amount of the penalty, to
transactions, if consummated, would stablecoins to persons in Iran, the extent that a civil monetary penalty
constitute a prohibited dealing in redeeming stablecoins of persons in is appropriate.110 Any of the 11 factors
blocked property, unless authorized or Iran, or allowing persons in Iran to may be considered aggravating or
exempt. In such instances, a stablecoin engage with the issuer’s smart contracts mitigating and may therefore result in
issuer is required to block these to facilitate trades of stablecoins, as any adjustments to the proposed penalty.
stablecoins because the blocked person of these activities would constitute a One of those factors includes the
has a property interest in the stablecoin provision of financial services to Iran. existence, nature, and adequacy of a
and such stablecoins are in the However, unlike when a blocked person subject person’s risk-based sanctions
possession or control of the stablecoin is directly or indirectly involved in a compliance program at the time of the
issuer, a U.S. person, at the time of the transaction, a stablecoin issuer would apparent violation. Accordingly, when
transaction. To effectively block such only be required to reject such applying the Enforcement Guidelines to
stablecoins, the stablecoin issuer must transactions and report them to OFAC. a given factual situation, OFAC
ensure that it has denied all parties OFAC’s regulations also require U.S. considers favorably the presence of an
access to the stablecoins, ensure that it persons, including stablecoin issuers, to effective sanctions compliance program
complies with OFAC regulations related comply with certain reporting and at the time of an apparent violation.
to the holding and reporting of blocked recordkeeping requirements, pursuant VI. Proposed AML/CFT Regulation
assets (discussed further below), and to OFAC’s Reporting, Procedures and
This proposed rule implements the
implement controls that align with a Penalties Regulations (RPPR).107 Among
GENIUS Act’s requirement that PPSIs be
risk-based approach.104 other requirements, the RPPR require
treated as financial institutions under
U.S. person stablecoin issuers are also U.S. persons, including stablecoin
the BSA. In doing so, it applies the BSA
prohibited from engaging in secondary issuers, to submit reports of blocked
obligations currently applicable to
market activities with blocked persons. property and rejected transactions to
existing financial institutions that are
For example, a U.S. person stablecoin OFAC within 10 business days and specifically enumerated in the GENIUS
issuer would engage in a prohibited annual reports of blocked property by Act,111 other quintessential BSA
provision of services to a blocked September 30 each year.108 Persons obligations, and GENIUS Act obligations
person if it allowed the blocked person engaging in transactions subject to the specific to PPSIs. It also proposes
to engage with the stablecoin issuer’s provisions of OFAC’s regulations are regulatory infrastructure, including
smart contract to facilitate trades of also required to preserve such records definitions, to effectuate the obligations.
stablecoins on the secondary market. In for at least 10 years.109 In crafting this proposed rule, FinCEN
this instance, the stablecoin issuer OFAC’s basic regulatory requirement is mindful that some entities may
would also be required to block such for all U.S. persons, including those that transition from the current MSB
stablecoins because the blocked person are stablecoin issuers, is that they do not framework to the new PPSI framework.
has an interest in the stablecoins, which violate the sanctions that OFAC FinCEN is also cognizant that some
the issuer controls via its smart contract. administers. The ramifications of non- PPSIs will be closely affiliated with or
OFAC sanctions prohibitions may compliance, inadvertent or otherwise, part of institutions with existing BSA
also take other forms that do not require can jeopardize critical foreign policy obligations. To promote regulatory
blocking but prohibit U.S. persons, and national security goals. Violations clarity and efficiency, FinCEN used its
including stablecoin issuers, from of OFAC sanctions may result in the well-established regulatory obligations
engaging in trade or financial imposition of civil or criminal penalties. for banks, MSBs, and other financial
transactions or other dealings with OFAC may impose civil penalties for institutions as points of reference for its
certain persons or geographic regions or sanctions violations on a strict liability proposed PPSI obligations.
countries, such as North Korea, Cuba, basis, meaning that U.S. persons,
including those that are stablecoin A. Permitted Payment Stablecoin Issuers
102 See OFAC, Specially Designated Nationals
issuers, may be held civilly liable for Before turning to the specifics of the
lotter on DSK8BHNXB4PROD with PROPOSALS3
List, available at https://sanctionslist.ofac.treas.gov/ sanctions violations even if such person
Home/SdnList.
proposed regulation, FinCEN first
103 See OFAC, Revised Guidance on Entities outlines several broader considerations
105 See 31 CFR part 510, part 515, part 560, part
Owned by Persons Whose Property and Interests in
Property Are Blocked (Aug. 13, 2014), available at 589. 110 31 CFR part 501, Appendix A.
106 See 31 CFR 560.204, 560.410, 560.427.
https://ofac.treasury.gov/media/6186/ 111 Although specifically enumerated in the
107 See 31 CFR part 501.
download?inline. GENIUS Act, this proposed rule does not impose a
104 See OFAC, Frequently Asked Question 646, 108 See 31 CFR 501.603, 501.604.
customer identification program obligation, which
available at https://ofac.treasury.gov/faqs/646. 109 See 31 CFR 501.601. is the subject of a separate rulemaking.
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00009 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
18590 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
that impact how FinCEN proposes to In the BSA, Congress provided institutions overlap that FinCEN carved
regulate PPSIs and how it expects PPSIs authority for FinCEN to, through out MSBs from its regulatory definition
will operationalize the proposed regulation, expand the categories of of ‘‘bank’’ (and vice versa), making them
obligations. FinCEN first explains its financial institutions enumerated in 31 mutually exclusive.123 Just as the
assessment of how PPSI activities U.S.C. 5312(a)(2) to include a business business activities of MSBs overlap
compare to those of other types of engaging in activities ‘‘similar to, related substantially with those of banks, the
financial institutions defined in the BSA to, or a substitute for’’ the activities of business activities of PPSIs can overlap
and proposes using its authority under an enumerated financial institution.120 with those of banks. Notably, at least
31 U.S.C. 5312(a)(2)(Y). It then describes FinCEN has determined that PPSIs some PPSIs may have bank charters,124
how entities that are PPSIs may relate to provide services that are similar to or and PPSIs’ activities have similarities to
other categories of BSA-defined related to services authorized to be the business activities of more
financial institutions. Finally, FinCEN provided by BSA-defined financial ‘‘conventional’’ or ‘‘traditional’’ banks.
briefly discusses how it is proposing to institutions, and is accordingly, For example, the GENIUS Act
apply obligations with regards to proposing to exercise its authority under authorizes PPSIs to custody payment
different types of market activity. 31 U.S.C. 5312(a)(2)(Y). Doing so fulfills stablecoins and, thus, like some banks,
Congress’s directive that PPSIs be PPSIs will hold assets for customers.125
1. Defining PPSI as a Type of Financial subject to ‘‘all Federal laws’’ applicable Accordingly, in critical respects, PPSIs
Institution to financial institutions related to may offer services that are similar to
The GENIUS Act directs that a money laundering; promotes consistent some services provided by some banks.
‘‘permitted payment stablecoin issuer treatment of PPSIs under federal and In addition, it is expected PPSIs will
shall be treated as a financial institution state laws that reference the BSA often operate in close coordination with
for purposes of the Bank Secrecy Act’’ definition of ‘‘financial institution;’’ and other financial institutions, i.e., they
and ‘‘shall be subject to all Federal laws reduces uncertainty for PPSIs, their will engage in activities related to the
applicable to a financial institution prudential regulators, law enforcement, activities of BSA-defined financial
located in the United States relating to and other market participants. institutions. For example, some PPSIs
. . . prevention of money As discussed in this proposal, may partner with digital asset exchanges
laundering.’’ 112 However, the GENIUS stablecoin issuers are currently (i.e., MSBs) and other financial
Act does not specify how PPSIs should regulated under the BSA and FinCEN’s institutions to distribute payment
be mechanically codified into the implementing regulations as money stablecoins or facilitate their use in
existing BSA framework. transmitters, a type of MSB, and MSBs payments. It is expected that some
The BSA defines ‘‘financial fall under the definition of a financial PPSIs may also rely on banks and other
institution’’ as a range of entities, all of institution.121 In that capacity, issuers financial institutions to perform key fiat
which could be subject to statutory engage in the transmission of currency, on- and off-ramp functions, such as
obligations and FinCEN’s regulations.113 funds, or value that substitutes for accepting fiat currency from a bank
These institutions include insured currency. Under the GENIUS Act’s account when payment stablecoins are
banks; commercial banks and trust regime, PPSIs will continue to perform issued or transmitting fiat currency to a
companies; businesses engaged in the these kinds of activities when issuing or bank account when payment stablecoins
exchange of currency, funds, or value redeeming a payment stablecoin. are redeemed. PPSIs often may maintain
that substitutes for currency or funds; Additionally, the GENIUS Act explicitly their own bank accounts, with bank
and any person who engages as a preserves the ability of PPSIs to engage deposits comprising permissible reserve
business in the transmission of in MSB-like activities, including assets backing outstanding
currency, funds, or value that exchanging digital assets for monetary stablecoins.126 These interconnections
substitutes for currency.114 Notably, value, exchanging digital assets for other reinforce certain functional similarities
designation as a ‘‘financial institution’’ digital assets, and transferring digital between PPSIs and other BSA-regulated
under 31 U.S.C. 5312(a)(2) affects assets to a third party, so long as the financial institutions.
treatment not only under the BSA but activity is authorized by the PPSI’s In light of the GENIUS Act’s directive,
also under other statutes that address primary Federal payment stablecoin the existing treatment of many
money laundering or predicate crimes regulator or State payment stablecoin stablecoin issuers as MSBs, the
that can underpin money laundering. regulator and consistent with all other functional similarities between PPSIs
federal and state laws.122 and BSA-defined financial institutions,
These laws include those relating to
The activities of MSBs can overlap and, the interconnectedness between
federal third-party subpoenas 115 to
substantially with those of other types PPSIs and BSA-defined financial
access to financial records by U.S. law of financial institutions, particularly
enforcement,116 criminal money institutions, FinCEN has determined
banks. Indeed, so significantly can the that PPSIs engage in activities that are
laundering 117 and terrorist financing activities of these two types of financial
offenses,118 as well as other provisions ‘‘similar to’’ as well as ‘‘related to’’
of federal and state law.119 financial services in which other
120 31 U.S.C. 5312(a)(2)(Y).
121 See 31 U.S.C. 5312(a)(2)(R); 31 CFR
123 See 31 CFR 1010.100(d)(7) (defining a bank, in
112 12 U.S.C. 5903(a)(5)(A). 1010.100(t)(3), (ff)(5).
113 See 31 U.S.C. 5312(a)(2); see also, e.g., 31 122 See 12 U.S.C. 5903(a)(7)(B) (including as a rule
part, as ‘‘Any other organization (except a money
services business) chartered under the banking laws
U.S.C. 5318. of construction that ‘‘Nothing in [12 U.S.C. of any state and subject to the supervision of the
114 31 U.S.C. 5312(a)(2)(A), (B), (J), (R). 5903(a)(7)(A)] shall limit a permitted payment bank supervisory authorities of a State’’),
lotter on DSK8BHNXB4PROD with PROPOSALS3
115 18 U.S.C. 986(a). stablecoin issuer from engaging in payment
1010.100(ff)(8)(i) (definition of money services
116 12 U.S.C. 3414. stablecoin activities or digital asset service provider
business ‘‘shall not include . . . a bank or foreign
activities . . . that are authorized by the primary
117 18 U.S.C. 1956. bank’’).
Federal payment stablecoin regulator or the State 124 See 12 U.S.C. 5901(11)(B) (including
118 18 U.S.C. 2339B.
payment stablecoin regulator, as applicable,
119 See, e.g., 50 U.S.C. 3164(5) (defining financial
consistent with all other Federal and State laws, uninsured national banks within the definition of
institution for purposes of subchapter); Ariz. Rev. provided that the claims of payment stablecoin ‘‘Federal qualified payment stablecoin issuer,’’ a
Stat. Ann. 6–1241(3) (defining money transmitter holders rank senior to any potential claims of non- type of PPSI under 12 U.S.C. 5901(23)(B)).
125 See 12 U.S.C. 5903(a)(7)(A)(iii)–(v).
under Arizona law by referencing ‘‘financial stablecoin creditors with respect to the reserve
institution’’ as defined under 31 U.S.C 5312). assets. . . .’’). 126 See 12 U.S.C. 5903(a)(1)(A)(ii).
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18591
financial institutions identified in 31 under this proposed rule affects that of ruling.132 When FinCEN issued that
U.S.C. 5312(a)(2) are authorized to the parent. ruling, loan and finance companies had
engage, and thus proposes exercising its Under this proposed rule and just been added to the list of financial
31 U.S.C. 5312(a)(2)(Y) authority to FinCEN’s existing regulations, FinCEN institutions under the BSA, and FinCEN
expressly define PPSIs as financial expects its regulations that are had just issued regulations requiring
institutions under the BSA. applicable to a parent insured loan and finance companies to develop
depository institution and its subsidiary and implement written AML
2. PPSIs’ Relationship to Other Types of PPSI could be similar to one another. If programs.133 FinCEN’s ruling stated that
Financial Institutions so, a PPSI and its parent would be able when a loan or finance company
to coordinate compliance practices and subsidiary and a parent financial
PPSIs will be uniquely positioned
share compliance resources, and the institution are subject to the same rule
relative to other kinds of financial
PPSI, as part of the insured depository and are examined by the same regulator,
institutions. In some cases, PPSIs may the subsidiary is ‘‘deemed to comply
institution as a whole, can leverage the
be subsidiaries of depository with FinCEN’s regulations[.]’’ 134
parent’s program. For example, FinCEN
institutions. In other cases, a single FinCEN requests comment on whether it
is proposing to impose an AML/CFT
institution may be subject to BSA would be appropriate to apply the logic
program on PPSIs that largely mirrors its
obligations as both a bank and a PPSI. of this administrative ruling to PPSIs
proposed programs for banks.129
Stablecoin issuers that may become FinCEN recognizes the value of that are subsidiaries of insured
PPSIs are currently regulated as MSBs. enterprise-wide compliance efforts, but depository institutions, or conversely
FinCEN seeks to promote a clear and also that such efforts must account for whether the holding of the
efficient BSA regulatory regime and, obligations unique to a particular entity. administrative ruling should be
accordingly, outlines its current For example, where a PPSI is a broadened to apply to subsidiaries and
thinking regarding how a PPSI’s subsidiary of an insured depository parents that are subject to similar rules
obligations will interact with the institution, FinCEN anticipates that the but not the same rule. FinCEN also
obligations of other BSA-regulated enterprise may elect to extend a single requests comment on whether it is
institutions. FinCEN seeks comment on AML/CFT program to both entities. proposing any obligations on PPSIs that
its proposed approaches. FinCEN assesses that doing so would be would conflict with existing obligations
permissible so long as a comprehensive of an insured depository institution
i. Subsidiaries of Insured Depository such that complying with both would be
Institutions AML/CFT program is reasonably
designed to identify and mitigate the legally or practically impossible.
Under the GENIUS Act, one of the risks posed by the different aspects of ii. Uninsured National Banks
three subcategories of PPSIs is a each entity’s business and activities and
The GENIUS Act also permits certain
‘‘subsidiary of an insured depository satisfies each of the AML/CFT program
uninsured national banks to be PPSIs.135
institution,’’ which includes insured and other BSA requirements to which
Such an institution would potentially be
depository institutions (as defined by 12 the PPSI and parent are subject.
subject to BSA obligations both as a
U.S.C. 1813) and insured credit Where a PPSI is subject to obligations
bank and as a PPSI. Much like with
unions.127 Because all insured that differ from those of its parent, a
PPSIs that are a subsidiary of an insured
depository institutions in the United PPSI must comply with the PPSI-
depository institution, FinCEN expects
States are subject to regulation under specific provision. For instance, as the that its efforts to harmonize obligations
the BSA, at least some PPSIs will likely GENIUS Act directs and this proposed for various types of financial
be the subsidiaries of parents that are rule would require, a PPSI must have institutions will facilitate such an
subject to their own AML/CFT the ‘‘technical capabilities, policies, and entity’s ability to efficiently comply
obligations under FinCEN’s procedures to block, freeze, and reject with both bank and PPSI obligations.
regulations.128 PPSIs that are specific or impermissible transactions Moreover, as explained below, some of
subsidiaries of insured depository that violate Federal or State laws, rules, the obligations proposed in this rule are
institutions in the United States may be or regulations.’’ 130 That statutory similar to those currently imposed on
required by certain Federal functional requirement will necessarily mean a banks. Where obligations differ, an
regulators to generally comply with a PPSI must have internal policies, institution that is both a bank and a
parent entity’s AML/CFT obligations. procedures, and controls to comply with PPSI, however, will be required to
The question naturally arises whether, the obligation to block, freeze, and reject comply with both sets of obligations.
and if so how, the parent’s AML/CFT applicable transactions, which could be FinCEN requests comment on whether it
program obligation affects that of the part of enterprise-wide policies and is proposing any obligations that would
subsidiary PPSI and, conversely, how procedures or unique in the corporate
the subsidiary PPSI’s obligations under structure to PPSIs.131 132 FinCEN, FIN–2012–R005, Compliance
this proposed rule could affect that of It is also possible that a subsidiary Obligations of Certain Loan or Finance Company
the parent. Overall, FinCEN expects that PPSI may be subject to an obligation Subsidiaries of Federally Regulated Banks and
parallel to that of its parent in a Other Financial Institutions (Aug. 13, 2012)
the similarities among its regulations available at https://www.fincen.gov/system/files/
will facilitate coordination between situation where a Federal functional administrative_ruling/FIN-2012-R005.pdf.
subsidiary and parent, and conversely, regulator requires a subsidiary to 133 See FinCEN, Anti-Money Laundering Program
how the subsidiary PPSI’s program comply with its parent’s regulatory and Suspicious Activity Report Filing Requirements
obligations. FinCEN addressed such a for Residential Mortgage Lenders and Originators,
lotter on DSK8BHNXB4PROD with PROPOSALS3
77 FR 8157 (Feb. 14, 2012).
127 See 12 U.S.C. 5901(23)(A); 12 U.S.C. 5901(15)
situation in a 2012 administrative 134 FinCEN, FIN–2012–R005, supra note 132, p. 2.
(defining ‘‘insured depository institution’’ as ‘‘(A) 135 See 12 U.S.C. 5901(11)(B); see also
129 See infra section VI.C.3.
an insured depository institution, as defined in Implementing the Guiding and Establishing
section 3 of the Federal Deposit Insurance Act (12 130 12 U.S.C. 5903(a)(5)(A)(iv).
National Innovation for U.S. Stablecoins Act for the
U.S.C. 1813); and (B) an insured credit union’’); see 131 Id.; see also infra section VI.C.6 for a Issuance of Stablecoins by Entities Subject to the
infra section VI.C.1.ix (discussing proposed discussion of additional technical capabilities, Jurisdiction of the Office of the Comptroller of the
definition of permitted payment stablecoin issuer). policies, and procedure requirements specific to Currency, 91 FR 10202, 10232, 10296 (Mar. 2,
128 See 12 U.S.C. 5901(23)(A); 31 CFR part 1020. PPSIs. 2026).
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
18592 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
conflict with existing obligations such leverage them to comply with existing required to maintain, including under
that complying with both would be law. the Recordkeeping and Travel Rules.
legally or practically impossible. In contrast, FinCEN is not proposing Section VI.C.10 describes FinCEN’s
FinCEN also requests comment on to require a PPSI as part of an AML/CFT proposals relating to information
whether it can take steps to promote program to monitor secondary market sharing authorities. Finally, section
efficiencies where a single entity is activity, although a PPSI will be VI.C.11 describes FinCEN’s proposals
subject to two obligations. required to understand the risk its relating to enhanced due diligence
customers pose as part of its due PPSIs will be required to undertake, as
iii. Money Services Businesses diligence, as well as its distribution well as application of special measures.
Finally, the activities in which PPSIs channels, including the blockchains on
will engage constitute money which its payment stablecoins are 1. Definitions
transmission, the logic under which deployed. FinCEN is also not proposing FinCEN is proposing to amend four
stablecoin issuers are currently to require PPSIs to file SARs on existing definitions and add nine new
regulated as MSBs. To limit overlapping secondary market transactions as terms to the general definitions section
obligations and confusion, FinCEN FinCEN has preliminarily assessed that of its regulations, 31 CFR 1010.100.
proposes affirmatively carving out PPSIs the burden of requiring PPSIs to file Where it is adding new terms, in large
from the definition of MSB.136 FinCEN SARs concerning secondary market part, FinCEN is proposing promulgating
requests comment on whether this carve activity could potentially outweigh the the same language as the GENIUS Act.
out is appropriate and results in any potential benefits. FinCEN requests In a few instances, however, FinCEN’s
ambiguity. comment on its proposed approach. proposed language diverges from the
This carve out only applies to PPSIs,
C. Section-by-Section Analysis statutory text in order to reconcile
and not to other persons engaged in
activities involving the issuance of FinCEN is proposing changes to its differences between how the GENIUS
stablecoins that are not payment existing regulations, as well as creation Act defines a term and how the same
stablecoins. In general, FinCEN is not of a new part applicable to PPSIs, term is defined in FinCEN’s existing
changing the regulatory framework that proposed part 1033.137 Section VI.C.1 regulations or to avoid confusion when
currently applies to activities involving describes changes proposed to FinCEN’s similar terms are defined both by the
CVCs and to entities other than PPSIs existing definitions as well as proposes GENIUS Act and FinCEN’s existing
engaging in those activities. For new definitions. Section VI.C.2 regulations. FinCEN is also proposing
example, stablecoin issuers that issue describes FinCEN’s proposed delegation modifications to improve readability,
tokens that are not payment stablecoins, of its examination authority. Section including not adopting GENIUS Act
i.e., value that substitutes for currency, VI.C.3 describes FinCEN’s proposed language where it is unnecessary for
will remain subject to the MSB requirement for PPSIs to establish AML/ purposes of this proposed rule.
framework. Other than changes specific CFT programs, to include risk-based Relatedly, FinCEN is not proposing to
to PPSIs, FinCEN does not intend for procedures for conducting ongoing promulgate regulatory definitions for
this proposal to change any aspect of customer due diligence (CDD). Section the GENIUS Act definitions for some
FinCEN’s framework relating to value VI.C.4 describes FinCEN’s proposal words even though FinCEN is proposing
that substitutes for currency or entities related to supervision and enforcement. rule text for terms that reference those
that engage in activity related to the Section VI.C.5 describes FinCEN’s words. For instance, both the GENIUS
same. proposal relating to collection of Act and FinCEN’s proposed definition
beneficial ownership information for of ‘‘permitted payment stablecoin
B. Obligations for Primary and issuer’’ use the term ‘‘subsidiary,’’
legal entity customers. Section VI.C.6
Secondary Market Activity which is in turn defined by the GENIUS
describes FinCEN’s proposals for
FinCEN is proposing that some PPSI additional technical capabilities, Act by reference to section 3 of the
obligations will apply to the secondary policies, and procedure requirements Federal Deposit Insurance Act (12
market, while others will not. In doing specific to PPSIs, as mandated by the U.S.C. 1813).138 With limited
so, FinCEN has attempted to balance GENIUS Act. Section VI.C.7 describes exceptions, FinCEN assesses that while
what it currently assesses is the burden FinCEN’s proposal related to PPSIs these additional definitions may be
of secondary market obligations against currency transaction reporting essential for other regulatory authorities
the prospective benefit. FinCEN is requirements. Section VI.C.8 describes to discharge their regulatory obligations
proposing applying secondary market FinCEN’s proposal for PPSI suspicious relating to approving issuers, they are
obligation where PPSIs can most activity reporting requirements. Section not necessary to understand the scope of
directly mitigate illicit finance in the VI.C.9 describes FinCEN’s proposal FinCEN’s proposed obligations or the
U.S. financial system. Notably both relating to records PPSIs will be population on which those obligations
obligations where FinCEN is proposing will be imposed.
secondary market obligations are 137 As part of proposed part 1033, FinCEN
None of these proposed changes to the
imposed on PPSIs directly by the proposes that if one portion of the proposed GENIUS Act’s language are intended to
GENIUS Act. FinCEN is proposing regulation, if finalized, is found to be invalid, the
invalidated portion of the regulation should be substantively alter the GENIUS Act’s
PPSIs have obligations with regards to severed with the remaining portions of the requirements as implemented through
the secondary market as part of regulation remaining in full force and effect. this propose rule. FinCEN seeks
technical capabilities and policies and FinCEN’s position is that invalidation of any one comment on the clarity of these
provision, or application thereof to any one person
lotter on DSK8BHNXB4PROD with PROPOSALS3
procedures to block, freeze, and reject definitions, including whether any
or circumstance, does not, and should not, affect
impermissible transactions and any other provision in this proposed regulation. deviation that FinCEN is proposing from
technical capabilities to comply, and Each provision serves an important, related, but the GENIUS Act’s language could be
complying, with the terms of lawful distinct purpose and application, designed to read as changing the intended effect of
orders. In some cases, stablecoin issuers benefit the public by protecting the U.S. financial
system from illicit financial activity. FinCEN
already have such capabilities and accordingly has proposed each provision such that 138 See 12 U.S.C. 5901(32) (defining
invalidity to one provision would not undermine ‘‘subsidiary’’); see also 12 U.S.C. 5901(23) (defining
136 See infra section VI.C.1.ii. the operability or usefulness of the other provisions. ‘‘permitted payment stablecoin issuer’’).
VerDate Sep<11>2014 18:56 Apr 09, 2026 Jkt 268001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 E:\FR\FM\10APP3.SGM 10APP3
Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18593
the Act, and whether any additional iv. Proposed Amendment to 31 CFR Under the proposed rule, the term
terms should be defined. 1010.100(eee)—Transmittal Order ‘‘distributed ledger’’ would mean a
FinCEN is reserving two FinCEN is proposing to amend the technology in which data is shared
subparagraphs, (nnn) and (ooo), definition of ‘‘transmittal order,’’ 31 across a network that creates a public
expecting they will contain definitions CFR 1010.100(eee), to add a payment digital ledger of verified transactions or
proposed in a previously issued FinCEN stablecoin as a subject of an order. As information among network participants
rulemaking related to AML/CFT discussed in greater detail below, this and cryptography is used to link the
programs for the 11 types of existing amendment is intended to clarify that a data to maintain the integrity of the
financial institutions. transmittal order to pay payment public ledger and execute other
stablecoins is a transmittal order like an functions. The term distributed ledger is
i. Proposed Amendment to 31 CFR