The US Treasury yesterday published proposed rules to implement the GENIUS Act’s requirements to address illicit finance, including AML and sanctions, with the proposals developed in conjunction with FinCEN and OFAC. Rather than detailing the entire document, the analysis centers on two areas: the extent of stablecoin issuer involvement with secondary market transactions and enhanced due diligence. An interesting detail in the regulatory impact analysis notes that FinCEN and OFAC expect roughly 50 permitted payment stablecoin issuers (PPSIs) to be operating on average during the first three years.
In contrast to some jurisdictions, self-hosted wallets are barely mentioned, and the proposals impose no additional requirements on them, though enhanced due diligence remains a possibility for a different group. Existing rules require in-depth due diligence for foreign financial institutions and banks and for private banking accounts, often described as correspondent accounts; similar requirements will be imposed on stablecoin issuers. The rules are relevant where the issuer provides regular services, dealings, and other financial transactions to a foreign institution or bank, including issuance, redemption, reserve management, custody and related services.
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