Fed, Agencies Propose Bank-Style KYC for Payment Stablecoins

On June 18, 2026, the Federal Reserve Board of Governors published a proposal requiring certain payment stablecoin issuers to establish customer identification programs similar to those used by banks and credit unions. The rule was issued jointly with four federal agencies and will appear in the Federal Register, triggering a 60-day public comment period.

The proposal applies to payment stablecoin issuers — firms that mint and redeem stablecoins used for payments — not to all digital asset companies. It would require formal know-your-customer checks at issuance to reduce the ability of bad actors to obtain large amounts of stablecoins without verification.

Regulators noted the requirements mirror anti-money-laundering standards applied across the banking system and aim to align issuance practices with existing bank rules.

Federal Reserve Governor Michael S. Barr supported the proposal but warned the GENIUS Act, the legislative framework for stablecoins, may not fully address illicit finance risks in secondary markets. He wrote, “I remain concerned that the GENIUS Act regulatory framework does not do enough so far to address the risks of illicit finance conducted through secondary market transactions in payment stablecoins.”

Barr noted secondary markets can move stablecoins between wallets and platforms with limited oversight, creating opportunities for evasion. He added that while some digital asset service providers face anti-money-laundering and counter-terrorism-financing rules in their home jurisdictions, those rules can be easy to sidestep in practice. He warned, “It is far too easy for bad actors to evade these restrictions and operate without detection when transacting in digital assets.”

Regulators cited market size as a concern: total supply across major stablecoin issuers exceeds $300 billion. They noted rapid cross-border transfers and weak identity checks at issuance can make detecting illicit flows harder.

The 60-day comment period will accept feedback from issuers, financial institutions, consumer groups and legal experts before any rule is finalized. Officials signaled that rules addressing secondary market activity are under review and could follow depending on public comments and further assessment of the GENIUS Act.