US proposes ID checks for stablecoin minting, limits DeFi

A joint proposal from FinCEN, the Federal Reserve, the Office of the Comptroller of the Currency, the FDIC and the NCUA would require permitted payment stablecoin issuers to maintain written Customer Identification Programs. The proposal was published in the Federal Register on June 22, and the agencies set a 60-day comment period that closes on Aug. 21.

Under the draft rule, issuers must adopt risk-based procedures to form a reasonable belief about each customer’s identity. For individuals, the proposal lists legal name, date of birth, address and an identification number as typical data points. For legal entities, issuers would collect comparable identifying information and use verification processes.

The agencies say the change implements a provision in the GENIUS Act to treat permitted payment stablecoin issuers as financial institutions under the Bank Secrecy Act.

The proposal defines an account relationship as a formal relationship established to obtain services directly from an issuer, such as minting, redeeming, custody or other issuer products. Activity that does not involve a formal relationship with the issuer – including on-chain transfers, off-chain exchange ledger entries, wallet-to-wallet moves and smart-contract interactions – is excluded from the issuer’s CIP obligation as drafted.

The agencies estimate roughly 99% of stablecoin transaction activity occurs in the secondary market and that nearly all users of payment stablecoin products are secondary-market users.

The notice notes collecting identity information beyond direct issuer relationships would be practically challenging because issuers often have limited visibility once tokens circulate. Expanding identity requirements into secondary-market flows would require defining which intermediaries must collect information, which transfer types are covered and how far an obligation follows a token after issuance.

Potential affected parties listed in the proposal include centralized exchanges, hosted wallet providers, payment processors, analytics vendors, DeFi front ends and services adjacent to smart contracts. The draft keeps secondary-market activity distinct from issuer-facing activity and does not assign issuer responsibility for most post-issuance token movements.

The agencies invited comments from issuers, exchanges, wallet companies, DeFi developers, banks, consumer groups and compliance vendors by Aug. 21.