Blockchain intelligence firm Elliptic has share a detailed update on a major regulatory step forward by the US Treasury Department. On April 8, 2026, the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC) released a notice of proposed rulemaking (NPRM) under the GENIUS Act. The proposal sets out clear expectations for permitted payment stablecoin issuers (PPSIs) to strengthen sanctions compliance, particularly in secondary market activity, once the full regulatory regime takes effect in January 2027.
According to Elliptic’s analysis, PPSIs will face the same rigorous anti-money laundering and counter-financing of terrorism (AML/CFT) obligations already required of traditional US financial institutions.
This includes senior-management oversight of compliance programs, regular risk assessments, risk-based customer due diligence, appointment of a dedicated AML/CFT officer, ongoing staff training, and independent audits.
Partnerships that stablecoin issuers form with exchanges and other counterparties for issuance and redemption will be classified as correspondent accounts, subjecting them to additional oversight under Section 311 of the USA PATRIOT Act.
A notable focus of the proposal is how issuers should evaluate financial crime risks specific to stablecoins.
Elliptic highlights that risk assessments must examine the technical features of each token’s smart contract—such as its ability to freeze or block funds—as well as the characteristics of the blockchains on which the stablecoin trades.
Issuers are expected to update these assessments whenever they modify smart-contract functionality or deploy their token on a new chain.
The NPRM draws a clear line between primary and secondary market activity.
In primary markets, where the issuer directly participates in issuance, redemption, or customer transactions, PPSIs must conduct full transaction monitoring and file suspicious activity reports (SARs) as needed.
Secondary market trading, however—activity that occurs peer-to-peer or on exchanges without the issuer as a direct party—receives different treatment.
FinCEN has determined that requiring continuous monitoring and SAR filings for secondary activity would be impractical and likely produce low-value “defensive” reports.
As a result, issuers will not be obligated to monitor or report suspicious secondary market transactions.
Yet the proposal does not grant a complete exemption. Elliptic stresses two critical ongoing responsibilities for secondary markets.
First, issuers must maintain the technical capability to freeze, block, or reject funds when ordered to do so by law enforcement or courts.
Second, and more significantly for sanctions compliance, PPSIs must actively prevent sanctioned individuals or entities—including those in comprehensively sanctioned jurisdictions—from using their stablecoin in secondary markets, even in unhosted wallet-to-wallet transfers.
Failure to do so could expose issuers to liability for sanctions violations conducted through their tokens. To meet these obligations, the Treasury encourages the use of blockchain analytics tools.
These solutions can enable smart contracts to automatically detect and block interactions with wallets linked to sanctioned parties. Elliptic notes that such capabilities will be essential for issuers seeking to operate safely and compliantly in the US market.
The NPRM is open for public comment for 60 days. Blockchain intelligence firm Elliptic’s update underscores that this update now brings clarity to a complex area of crypto regulation, helping stablecoin issuers balance innovation with financial crime controls.