FDIC Sets Bank Secrecy Act Standards for Stablecoin Issuers

The Federal Deposit Insurance Corporation (FDIC) Board of Directors has taken another step in implementing the GENIUS Act by approving a proposed rule that would implement Bank Secrecy Act (BSA) and sanctions compliance standards for FDIC-supervised permitted payment stablecoin issuers (PPSIs).

The proposed rule would require these PPSIs to comply with applicable regulations regarding anti-money laundering/countering the financing of terrorism (AML/CFT) and economic sanctions programs, and to comply with reporting requirements, including those established by the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control, the FDIC said in a Friday (May 22) press release.

It would also establish and align supervision and enforcement provisions for these AML/CFT programs with FinCEN requirements, according to the release.

The proposed rule is detailed in the notice of proposed rulemaking (NPRM) approved by the FDIC Board, and the FDIC will accept comments on it for 60 days after the NPRM’s publication in the Federal Register, per the release.

The board approved the NPRM by a vote of 3-0, according to the FDIC website.

“As authorized by the GENIUS Act, the FDIC is the primary Federal regulator of PPSIs that are subsidiaries of insured state nonmember banks and state savings associations approved by the FDIC to issue payment stablecoins,” the regulator said in the release.

The GENIUS Act became the country’s first-ever piece of cryptocurrency legislation in July when it was signed into law by President Donald Trump. PYMNTS reported at the time that the GENIUS Act provided a long-awaited policy framework and could signal a brand-new era for crypto in the U.S., or at least for stablecoins, which it was written to regulate.

The FDIC took its first action to implement the GENIUS Act in December when it approved an NPRM to establish procedures under which the insured depository institutions the regulator supervises could seek to issue stablecoin payments.

In February, the FDIC extended the comment period on that NPRM from Feb. 17 to May 18, saying it wanted to provide additional time for the public to prepare comments.

The FDIC Board of Directors approved another NPRM related to the GENIUS Act in April. This proposed rule would establish a prudential framework for FDIC-supervised permitted stablecoin issuers. This framework would include requirements for reserve assets, redemption, capital and risk management standards.