Stablecoins have established themselves as an innovative technology in the digital finance world, gaining attention as a practical means of payment. However, behind this innovation lie concerns about illicit financial activities and regulatory gaps. In this context, the U.S. Treasury Department has announced the first implementation measures under the newly enacted Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), signaling significant changes in the global financial market. On April 8, 2026, the U.S. Treasury Department released joint proposed rules from FinCEN (Financial Crimes Enforcement Network) and OFAC (Office of Foreign Assets Control). These rules mandate stablecoin issuers to operate Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) programs. This is seen as a signal to harmonize the growth of the global cryptocurrency market with the pace of strengthening regulatory frameworks. If the proposed rules are finally adopted, it will mark a significant step forward in operationalizing the stablecoin regulatory framework, explicitly placing authorized payment stablecoin issuers within the framework of the Bank Secrecy Act and U.S. sanctions laws. The GENIUS Act, enacted in July 2025, introduced the first federal-level regulatory framework for stablecoins in the United States. This legislation aims to provide clear and consistent standards for stablecoin issuance and operation, with key objectives including strengthening reserve requirements, harmonizing state and federal stablecoin laws, and mandating clear and conspicuous redemption procedures. Notably, provisions mandating a 1:1 reserve maintenance and prohibiting the offering of interest to stablecoin holders are measures that consider the potential impact of stablecoins on the traditional banking system. According to a White House report, concerns were reflected that if stablecoins offered competitive returns, household funds could shift from traditional bank accounts to digital tokens, weakening banks' deposit bases and consequently reducing bank lending. These regulations demonstrate policymakers' commitment to balancing digital financial innovation with the stability of the traditional financial system. The Treasury Department's proposed rules specifically focus on enhancing the overall stability of the financial system, particularly in terms of anti-money laundering and counter-terrorist financing. These measures provide a legal basis to prevent stablecoins from being used for funding terrorist organizations, illicit cross-border fund transfers, drug trafficking, and other criminal activities. Given the inherent anonymity and cross-border transaction capabilities of digital assets, there is a risk of them becoming a hotbed for illicit finance. Therefore, these regulations are essential for ensuring the soundness of the digital financial ecosystem. According to the new proposed rules, authorized payment stablecoin issuers (PPSIs) must establish and maintain reasonably designed written AML and CFT programs to prevent the illicit financial misuse of payment stablecoins. This program framework is designed to be very similar to the AML/CFT program requirements that FinCEN applies to existing banks and financial institutions. PPSIs will, in effect, be required to meet the same regulatory standards as traditional financial institutions. The Treasury Department emphasized in the proposed rules that AML/CFT programs must be risk-based. This means that instead of applying the same level of scrutiny to all customers and transactions, resources should be concentrated on high-risk elements by thoroughly analyzing customer bases and transaction patterns. For instance, enhanced due diligence (EDD) must be performed for customers who frequently move large sums of money, engage in transactions linked to sanctioned countries, or exhibit suspicious patterns. Like other financial institutions, PPSIs must identify and monitor suspicious activities and submit Suspicious Activity Reports (SARs) to FinCEN. The Treasury Department emphasized that SAR reporting is crucial for ensuring law enforcement visibility into illicit financial risks associated with payment stablecoins. These reports serve as a critical source of information for judicial authorities to track and prevent crimes related to digital finance. Especially given the anonymity and difficulty in tracing cryptocurrencies, the SAR system will be an important tool for detecting illicit activities. Strengthening AML/CFT Programs Reveals Determination to Crack Down on Illicit Finance PPSIs must also rigorously implement Know Your Customer (KYC) procedures, identifying customers' identities, transaction purposes, and sources of funds. This is expected to play a key role in bridging the regulatory gap and harmonizing the traditional and digital financial systems. As the digital asset industry matures, regulatory compliance is becoming a necessity, not an option.
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