The Fed proposes requiring stablecoin issuers to verify customer identities and applying the bank's CIP standard to the stablecoin market before the January 2027 deadline.
The U.S. Federal Reserve ( Fed ) announced on Thursday a proposal requiring issuers of permitted payment stablecoins (PPSIs) to maintain a written customer identification program before opening accounts or allowing direct Token exchange.
This move demonstrates Washington's determination to bring the cryptocurrency market under the same anti- Capital laundering discipline that has long been applied to the traditional banking system, as regulators race to finalize regulations before the January 2027 legislative deadline.
According to the proposal, PPSIs would have to collect from each new customer the legal name, date of birth or incorporation, physical address, and government-issued identification number before opening an account. This framework reflects the obligations of customer identification programs (CIPs) that banks, securities brokers, mutual funds, and Futures Contract commission traders have operated for more than two decades. Regulators will be accepting public comments on the proposal over the next 60 days.
A dense chain of regulations was built ahead of the Genius Act.
Thursday's proposal is the latest development in a wave of regulation-building initiated by the Genius Act, signed into law by President Trump in July 2025, which for the first time established a federal regulatory system for stablecoins, requiring 100% reserve backing by liquidation assets and placing issuers under the purview of the Bank Secrecy Act (BSA).
The act will take effect sometime between January 18, 2027, or 120 days after federal agencies issue the final implementing regulations.
Previously, in April 2026, the Financial Crime Enforcement Network and the Office of Foreign Asset Control (OFAC) issued a joint proposed regulation requiring PPSIs to implement a full anti-money laundering, anti-terrorism financing, and sanctions compliance framework, and to separate them from money service businesses (MSBs) to be considered separate financial institutions.
A significant change occurred when FinCEN discovered that approximately half of the known stablecoin issuers were unregistered, including MSB. The FDIC and OCC also issued parallel regulatory notices regarding licensing, reserves, Capital , and exchange standards.
Federal Reserve Governor Michael Barr continues to be the most cautious voice within the regulatory apparatus. Speaking at the Federalist Society conference in March, he warned that stablecoins face risks related to reserve asset quality, regulatory arbitrage, anti-money laundering loopholes, and financial stability—risks that the core content of the Genius Act fails to address.
In a statement on Thursday, he stressed that malicious actors can still easily circumvent current restrictions and operate undetected when trading in crypto assets.
The CIP proposal also takes into account the specifics of the stablecoin market: the definition of “account” would include direct redemption events, meaning that a buyer of Token on the secondary market who then redeems them directly with the issuer would trigger a CIP obligation, while purely secondary market transactions via smart contracts do not constitute an account relationship.
Because the final CIP regulations are not expected to be issued before 2027, the Genius Act may take effect before the customer identification framework is fully completed.
