US regulators want stablecoin issuers to verify the identity of their customers under proposed rules released today. The joint rulemaking by FinCEN, the Federal Reserve, OCC, FDIC and NCUA sets out customer identification program (CIP) requirements for permitted payment stablecoin issuers (PPSIs) as required by the GENIUS Act.
With any kind of rulemaking of this sort, the first question is always who needs to be identified? Is it only parties that directly buy or redeem from the issuer, or does it include others transacting with stablecoins in the secondary market? A fact sheet published by FinCEN omitted this crucial point.
The proposals clearly state that the CIP rules only apply to those individuals or entities that have a direct relationship with the stablecoin issuer CIP rules do not apply “where a transfer is the result of third parties and a payment stablecoin user’s only interaction with the PPSI is through a smart contract.” Given current US regulators are generally supportive of stablecoins, this stance is not surprising.
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