On Thursday, the Federal Reserve put forward a proposal requiring payment stablecoin issuers to establish formal written customer identification programs. This step underscores Washington’s intent to subject digital asset markets to the same anti-money laundering standards that have governed traditional banks for years — all while regulators work to finalize rules ahead of a January statutory deadline.
Under the proposal, permitted payment stablecoin issuers (PPSIs) would need to gather specific information from every new customer before opening an account: a legal name, date of birth or date of formation, a physical address, and a government-issued identification number.
The Federal Reserve’s framework closely follows the customer identification program (CIP) requirements that banks, broker-dealers, mutual funds, and futures commission merchants have been following for more than 20 years. Regulators will accept public comments on the proposal for a 60-day period.
This move by the Federal Reserve comes on the heels of a series of regulatory actions triggered by the Genius Act — officially known as the Guiding and Establishing National Innovation for U.S. Stablecoins Act — which President Trump signed into law in July 2025.
That groundbreaking legislation established the first federal regulatory framework for stablecoins, requiring issuers to back their coins 100% with liquid assets and bringing them under the Bank Secrecy Act for the first time.
The law mandates that stablecoin issuers set up effective anti-money laundering, sanctions compliance, and customer identification programs. The Genius Act takes effect on whichever date comes first: January 18, 2027, or 120 days after primary federal regulators publish their final implementing rules.
Federal Reserve Governor sounds a note of caution on stablecoins
Federal Reserve Governor Michael Barr has become the most prominent voice of caution within the regulatory system, even as his colleagues have shown growing openness to digital assets. Speaking at a Federalist Society conference in Washington in March, Barr cautioned that stablecoins carry significant risks related to the quality of reserve assets, regulatory arbitrage, anti-money laundering vulnerabilities, and threats to financial stability — issues he argued the Genius Act’s main provisions do not fully address on their own.
“While some digital asset service providers are subject to anti-money laundering and anti-terrorist financing requirements in their home jurisdiction, it is far too easy for bad actors to evade these restrictions and operate without detection when transacting in digital assets,” Barr said in a statement on Thursday.
Barr, who previously served as the Federal Reserve’s top banking regulator, maintains that detailed rulemaking remains the essential tool for turning the statute’s goals into enforceable safeguards.
Thursday’s proposal is the most recent in a rapid succession of rulemakings from multiple agencies. In April 2026, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC) released a joint proposed rule requiring PPSIs to implement written anti-money laundering and counter-terrorism financing programs along with a comprehensive sanctions compliance framework.
That rule would remove PPSIs from the existing money services business (MSB) classification and designate them as a separate category of Bank Secrecy Act-covered financial institutions — a major structural shift, considering FinCEN’s finding that about half of all known stablecoin issuers have not registered as MSBs.
The FDIC and OCC each issued their own notices of proposed rulemaking simultaneously, addressing licensing, reserves, capital requirements, and redemption standards. The CIP proposal announced on Thursday is a separate but complementary rulemaking alongside those AML and sanctions rules.
Stablecoin rules and their nuances
The proposed customer identification requirements include technical details specifically designed for stablecoin markets. Unlike traditional banks, a PPSI may face direct redemption requests from token holders who obtained their coins on the secondary market rather than through a direct issuance relationship with the issuer.
The proposal handles this scenario by defining an “account” to include that redemption event. In practical terms, this means someone who buys a stablecoin on an exchange and later redeems it directly with the issuer would trigger CIP obligations at the point of that transaction.
However, purely secondary market transactions where the PPSI is not a direct counterparty — including transfers executed through smart contracts — would not be considered an account relationship under the proposed framework.
The timeline for finalizing these rules is tight. With the Genius Act’s effective date potentially arriving as early as 120 days after agencies publish their final rules, the window for public comment, revisions, and adoption is narrow. Final CIP rules are not anticipated before 2027, which means the statute could go into effect before the customer identification framework is fully established.
