U.S. Treasury proposal would push stablecoin issuers to embed sanctions controls directly into protocol code

A joint rulemaking proposal from the Treasury's Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) would require digital asset firms—especially permitted payment stablecoin issuers—to integrate sanctions screening, transaction blocking, and monitoring directly into blockchain protocol code. Published in the Federal Register on April 10, the proposal would move compliance from a post-transaction overlay to automated, always-on enforcement built into the underlying infrastructure. Under the plan, stablecoin issuers would be treated as financial institutions under the Bank Secrecy Act. They would be required to maintain comprehensive anti-money laundering and counterterrorist financing programs, establish formal sanctions compliance programs with risk assessments and internal testing, and deploy technical systems that can freeze, block, and reject noncompliant transactions in real time. Industry feedback pointed to significant upfront compliance costs, a dynamic that could advantage better-capitalized firms and hasten consolidation. The shift could also expand demand for compliance technology providers, including blockchain analytics and risk-assessment services.