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Blockchain Association pushes back on stablecoin KYC scope
The industry group wants KYC rules limited to primary market activity, with zero-knowledge proofs accepted as a verification method for stablecoin issuers under the GENIUS Act.
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The Blockchain Association told federal regulators on August 21 that proposed know-your-customer rules for stablecoin issuers sweep too broadly. The industry group wants identification requirements limited to direct issuer-customer relationships, with zero-knowledge proofs accepted as a verification method.
The comment letter targets a joint proposed rule from FinCEN, the Federal Reserve, and other agencies. It would establish customer identification program requirements for permitted payment stablecoin issuers under the GENIUS Act, signed July 18. That legislation created the first federal framework for payment stablecoins in the US.
The Association endorsed the broad concept of KYC for stablecoin issuers. It draws the line at how far those obligations extend.
Under the proposal, CIP requirements mirror existing bank rules. Issuers would collect a customer's name, date of birth, address, and identification number. Records would be retained for five years after account closure.
The Association's position: these requirements should only apply where an explicit contractual relationship exists between issuer and customer. That means primary market activity, the direct minting and redemption of stablecoins where the two parties are actually transacting.