Crypto Regulatory Affairs: US Treasury Proposes Secondary Market Sanctions Compliance for Stablecoin Issuers

In this piece, author David Carlisle briefly looks at a series of major global regulatory developments shaping the future of stablecoins and digital asset oversight. A central focus is a proposed U.S. Treasury rule under the GENIUS Act that would require stablecoin issuers to implement robust anti-money laundering, counter-terrorist financing, and sanctions compliance programs similar to those imposed on traditional financial institutions. The proposal would also require issuers to maintain the technical ability to freeze or block stablecoin transactions in secondary markets involving sanctioned parties.

Carlisle explains that the proposal creates an important distinction between primary market activity, where issuers directly interact with customers and counterparties, and secondary market activity occurring between users on blockchain networks. While issuers would not generally be required to monitor secondary market transactions for suspicious activity reporting purposes, they could still face sanctions liability if their stablecoins are used by prohibited entities. As a result, regulators expect issuers to deploy blockchain analytics and smart contract controls capable of identifying and blocking sanctioned wallets and unlawful activity.

The article also examines political efforts surrounding the proposed U.S. CLARITY Act, including interventions from the White House, Treasury Secretary Scott Bessent, and SEC Chairman Paul Atkins aimed at accelerating passage of crypto market structure legislation. Debate has centered on whether stablecoin issuers should be allowed to offer yield-bearing products, with the administration arguing that prohibiting yield would provide little benefit to traditional banking while reducing consumer access to competitive financial products.

Beyond the United States, Carlisle highlights broader international momentum toward stronger crypto regulation and stablecoin experimentation. Swiss financial institutions are preparing to test a Swiss franc-pegged stablecoin under a regulatory sandbox, Australia has passed landmark legislation bringing digital asset providers under financial services regulation, and South Korea has introduced new fraud-prevention rules for crypto exchanges. The piece also notes new stablecoin licenses in Hong Kong and Japan’s decision to classify cryptoassets as financial products subject to stricter investor protection requirements…

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