Stablecoin news out of Washington this week goes beyond reserves and recoveries — the Financial Crimes Enforcement Network (FinCEN), the Treasury Department’s financial crimes unit, has proposed rules that would fundamentally overhaul how stablecoin issuers and all U.S. financial institutions approach anti-money laundering compliance, shifting from paper screening to risk-based self-policing of illicit transactions.
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- FinCEN published a proposed rule on April 7 that would “fundamentally overhaul” the Bank Secrecy Act compliance programs for all financial institutions — including stablecoin issuers, which are designated as financial institutions under the GENIUS Act — requiring them to build risk-based AML frameworks that focus on actual illicit financial threats rather than prescriptive documentation.
- Treasury Secretary Scott Besent framed the proposal explicitly as reducing the compliance burden: the goal is to redirect resources away from lower-risk activities toward higher-risk activities, reserving enforcement action only in the case of “significant or systemic failures.”
- Under the new framework, stablecoin issuers must build programs around four core pillars: internal policies and controls including risk assessments, a designated US-based BSA compliance officer, employee training tailored to the company’s risk profile, and independent testing of the program’s effectiveness.
The most relevant stablecoin news for compliance teams this week is not from the FDIC or OCC. It comes from FinCEN. Financial Crimes Enforcement Network Suggested The rules scheduled on April 7 would reshape how all U.S. financial institutions — including stablecoin issuers — manage their anti-money laundering programs. Fundamental shift: from measuring compliance by the volume of deposits and paperwork to measuring it by proven effectiveness in identifying and stopping illicit financing.
Treasury Secretary Scott Besent described the intent directly: “Our proposal restores common sense with a focus on keeping bad actors out of the financial system, not burying America’s banks in more red tape.” FDIC Chairman Travis Hill, whose agency is a co-regulator, called these reforms “perhaps the most significant reforms Congress envisioned in the AML Act.”
The GENIUS Act, signed into law in July 2025, classifies all issuers of stablecoins permitted for payments as “financial institutions” under the Bank Secrecy Act. This classification means that FinCEN’s proposal applies to them with the same force as it applies to banks. Stablecoin companies that previously operated under lighter compliance regimes — relying on government money transfer licenses and minimal internal oversight — must now build programs that meet bank-level anti-money laundering standards.
This is not a future requirement. The implementing regulations for the GENIUS Act must be finalized by July 18, 2026. Any stablecoin issuer operating after that date without compliant software faces potential enforcement actions including civil penalties, criminal prosecution, and license revocation.
The four pillars FinCEN now requires
Under the proposed framework, each covered financial institution — including stablecoin issuers — must build its anti-money laundering program around four core components. First: internal policies, procedures and controls, including a documented risk assessment process that identifies the specific illicit financing threats faced by the issuer based on its clients, products and geography. Second: A BSA compliance officer is physically located in the United States and has oversight authority over the program. Third: Continuous training for employees in proportion to the organization’s actual risks. Fourth: Independent testing conducted by an outside party to assess whether the program has been implemented effectively – with explicit language prohibiting auditors from substituting their own judgment for the organization’s risk-based decisions.
The proposal also specifies when implementation is appropriate. FinCEN said it generally will not initiate a major supervisory action unless an institution experiences a “significant or systematic failure” to maintain its program — a standard intended to protect well-managed programs from technical violations that do not pose a real illicit financing risk.
Such as crypto.news I mentionedThe FDIC, meanwhile, proposed a 191-page stablecoin rule covering reserves and redemption standards. Such as crypto.news malethe GENIUS enforcement framework includes the Treasury, the Federal Reserve, the OCC, and the Federal Deposit Insurance Corporation (FDIC) – with the Financial Crimes Enforcement Network (FinCEN) and OFAC playing central roles in sanctions and anti-money laundering oversight. FinCEN’s proposal fills the compliance design gap left open by the statute.
Comments on the proposed rule are due 60 days after publication of the Federal Register, and before the July 18 regulatory deadline.
