In a recent filing with federal regulators, US banking associations have called for stronger customer identification standards to cover more of the stablecoin ecosystem. The Bank Policy Institute (BPI), working jointly with The Clearing House Association, submitted comments on a proposed rule from the Financial Crimes Enforcement Network (FinCEN) and other banking agencies.
Their focus centers on extending existing identity verification rules beyond the issuers of payment stablecoins themselves.
The underlying proposal stems from implementation of the GENIUS Act, which established a federal framework for payment stablecoins.
Under that law, permitted payment stablecoin issuers (PPSIs) must maintain customer identification programs (CIPs) similar to those required of traditional banks under the Bank Secrecy Act.
These programs require collecting and verifying basic identifying information—such as name, date of birth or formation, address, and identification numbers—before establishing certain customer relationships, primarily in the primary market of issuance and redemption.
BPI and The Clearing House expressed general support for the proposed CIP framework but argued it leaves important gaps.
They noted that most activity involving payment stablecoins occurs after the tokens leave the issuer, in secondary markets where users buy, sell, or transfer them through intermediaries.
According to the associations, FinCEN itself has acknowledged that the bulk of illicit activity linked to stablecoins takes place in these secondary markets, where issuers typically have limited visibility.
The groups recommended that regulators clarify or expand CIP obligations to secondary-market participants.
In particular, they urged FinCEN and the agencies to make clear that digital asset service providers (DASPs)—including exchanges and platforms that establish account-style relationships with retail customers to facilitate stablecoin transactions—are subject to CIP requirements under the Bank Secrecy Act.
These intermediaries handle a substantial share of purchases and sales and maintain direct customer relationships, making them natural points for identity verification.
The associations suggested this clarification could come through additional guidance or a separate rulemaking.
They highlighted that many such platforms currently operate as money services businesses, which face Bank Secrecy Act obligations but lack formal CIP requirements comparable to those applied to banks.
Extending consistent standards, they argued, would close a regulatory gap and better address risks, consistent with the principle of applying similar rules to similar activities and risks.
Beyond secondary markets, the comment letter also sought clearer definitions of key terms such as “customer” and “account” to cover the range of relationships that arise in the stablecoin ecosystem, including direct redemptions.
The groups further recommended guidance allowing issuers flexibility to decline onboarding individuals who present compliance risks during redemption processes.
BPI and The Clearing House framed their recommendations as refinements that would reduce uncertainty, align the rules with the practical operation of stablecoin markets, and strengthen safeguards across the broader ecosystem without undermining the proposal’s core objectives. The comments form part of ongoing industry input as regulators finalize rules under the GENIUS Act.
