A proposed rule forces stablecoin issuers to verify identities at onboarding, mimicking bank standards. The 60-day comment period under the GENIUS Act starts debate on cost and exchange coverage.
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Five federal agencies published a proposed rule on June 18 that would require stablecoin issuers to verify customer identities under standards closely matching those for traditional banks. The rule implements parts of the GENIUS Act, the first comprehensive federal law for dollar-pegged tokens, which took effect in July 2025.
The joint proposal from FinCEN, the OCC, the Federal Reserve, the FDIC, and the NCUA targets “permitted payment stablecoin issuers” (PPSIs). These are the only entities allowed to issue dollar-pegged stablecoins under the new federal framework. They must already back each token one-to-one with cash or short-term Treasuries. The new rule adds a customer identification program (CIP) similar to the one banks have run for decades under the Bank Secrecy Act.
At account opening for direct issuance and redemption, an issuer would collect the customer’s full name, date of birth or formation date for entities, a physical address, and an identification number. Verification must happen within a “reasonable timeframe” using documentary or non-documentary methods. The procedures must be risk-based and scaled to the issuer’s size and operations.
The same recordkeeping, government list checks, customer notice, and suspicious activity reporting rules that apply to banks would apply here. When identity cannot be confirmed, the issuer must have protocols for declining or closing accounts and filing reports. Reliance on another regulated institution’s verification is allowed under certain conditions. The proposal also includes a provision for exemptions when multiple agencies concur.
A separate rulemaking, also tied to the GENIUS Act, addresses broader anti-money-laundering and counter-financing-of-terrorism program requirements for the same issuers.
The customer identification obligations cover only direct interactions between an issuer and its customers. Secondary-market trading on exchanges and peer-to-peer transfers are explicitly outside the scope. Some regulators flagged that gap and asked for public input on whether the rule should be expanded.
What the Rule Means for Issuers and Traders
The proposal is open for comment for 60 days after its Federal Register publication. That window likely closes around August 17. Industry pushback is expected on cost and privacy. So is the operational burden for non-bank issuers that have never run a bank-style CIP.
For PPSIs, the additional friction at onboarding could slow direct adoption of stablecoins for payments and remittances. Non-bank issuers face the steepest compliance lift. Building and maintaining a bank-grade CIP is expensive. If the cost proves prohibitive, smaller issuers may exit or consolidate, reducing diversity of dollar-pegged supply. The exemption provision softens that risk but does not eliminate it. The final rule’s cost-benefit analysis, due during the comment period, will show whether regulators expect material attrition.
For traders who hold stablecoins on exchanges, the rule has no direct effect on secondary transactions. That could change. The agencies explicitly invited input on covering exchange-based activity. If the scope expands, exchanges may need to implement similar verification for stablecoin transactions, adding friction for users.
The GENIUS Act’s two rulemakings – the CIP rule and the pending AML program rule – will determine whether stablecoin issuance bears compliance costs closer to a money-transmitter license or a full national bank charter. The comment process gives issuers and traders a concrete channel to shape the outcome. The deadline for comments is around August 17. A final rule could come in late 2026 or early 2027.
The rule adds to the growing regulatory framework for digital assets, a shift that traders should track as part of broader crypto market analysis.
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