U.S. Treasury to Set Compliance Bar for Stablecoin Issuers, Mandating Blocks and Freezes on Illicit Activity

The U.S. Treasury plans to advance joint rulemaking by the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC) that would subject stablecoin issuers to stronger anti-money laundering and sanctions compliance obligations. Under the proposal, issuers would be required to maintain risk-control frameworks capable of identifying, blocking, and freezing suspicious transactions. The rules would also call for risk-based customer due diligence and ongoing monitoring of customer activity, and would require issuers to support law enforcement investigations by tracing relevant transactions.