Implement the Genius Act! The U.S. will regulate stablecoin issuers and require “transaction freeze” anti–money laundering capabilities

The U.S. Department of the Treasury has officially classified stablecoin issuers as “financial institutions,” requiring them to comply with the Bank Secrecy Act and implement anti-money-laundering regulations. In addition, the compliance officer responsible for issuer compliance must be an American resident with no criminal record.

The Treasury teams up with two major agencies to implement oversight, and stablecoin businesses are formally listed as financial institutions

The U.S. Department of the Treasury took a key step in regulation yesterday (4/8). Its Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC) jointly issued a proposed rule aimed at fully implementing the GENIUS Act passed in July 2025.

At the heart of this regulatory framework is defining “permitted payment stablecoin issuers” (PPSIs) as “financial institutions” under the scope of the Bank Secrecy Act (BSA). In a statement, U.S. Treasury Secretary Scott Bessent clearly said that the proposal’s primary goal is to protect the U.S. financial system from national security threats, while ensuring that U.S. companies can continuously maintain competitiveness in the stablecoin payment ecosystem.

The push for this legislation reflects the Trump administration’s ambition to position the United States as a global leader in digital assets, and also shows the government’s tough stance toward national security defenses.

Strengthening AML and sanctions compliance, granting issuers transaction-freezing authorities

Under this proposed new rule, stablecoin issuers will bear legal responsibilities equivalent to those of traditional banks. Issuers must establish comprehensive anti-money-laundering (AML) and countering the financing of terrorism (CFT) programs and have the ability to proactively detect and report suspicious activity. The new rule explicitly requires that issuers, at the technical level, have the authority to “intercept, freeze, and refuse” specific transactions, so that they can block the flow of funds associated with illegal actors when law enforcement agencies make requests.

Snir Levi, CEO of blockchain intelligence firm Nominis, said that this change will turn issuers into a bank-like gatekeeper, and in the future the market will see larger-scale wallet freezes, transaction interceptions, and asset seizure actions.

The Treasury believes these obligations are “tailor-made” and aligned with the intended purpose. The agency will adjust standards according to the issuer’s size and business complexity, aiming to strike a balance between combating crime and promoting technological research and development, while avoiding an overly heavy administrative burden on the industry.

Strictly vet compliance officers; cross-agency collaboration to build a digital cash ecosystem

To ensure the compliance program is effectively implemented, the proposal sets strict thresholds for issuer staffing arrangements. In the future, stablecoin issuers must designate dedicated personnel to oversee anti-money-laundering and terrorism financing defense systems. The responsible person must reside within the United States and must not hold such a position if they have a criminal record such as insider trading, cybercrime, or financial fraud. In addition to the Treasury, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) have also released related implementation details.

In its proposal, the FDIC specifically clarified that while the reserve deposits of stablecoin issuers would be protected, individual stablecoin holders would not be covered by federal deposit insurance. Rating agency Moody’s senior vice president Warren Kornfeld analyzed that if these rules are fully implemented, it will create a tiered digital cash ecosystem within the banking system, and the line between traditional banks and digital assets will become even more blurred.

• Related news: New FDIC rules in the U.S.! Stablecoin reserves face strict requirements and are not eligible for the $250k-per-person deposit insurance

Market outlook and political maneuvering: risks and opportunities facing stablecoin issuers

With the GENIUS Act expected to take full effect in 2027, major issuers such as Tether, Circle, Ripple, and World Liberty Financial, which is related to the Trump family, are all waiting for the final details to be finalized. Despite rising regulatory pressure, the industry generally believes that clarifying regulations will help stablecoin assets move into the mainstream market. According to a Chainalysis report, by 2035, annual stablecoin transaction volume could surge to $1,500 trillion.

Image source: Chainalysis Chainalysis predicts that by 2035, annual stablecoin transaction volume could surge to $1,500 trillion

However, political maneuvering has not stopped. The debate in the Senate over the CLARITY Act remains deadlocked. The White House Council of Economic Advisers opposes a ban on stablecoin earnings, saying the ban would do little to protect bank lending and would instead increase user costs.

On the international front, Iran recently announced plans to charge a $1 per barrel bitcoin ($BTC) toll on oil tankers transiting the Strait of Hormuz to evade sanctions. The illegal financial risks arising from such geopolitical conflicts have prompted the U.S. Treasury to accelerate the establishment of strict control mechanisms through the GENIUS Act.

Further reading
White House study: Banning stablecoin interest is almost useless for protecting bank loans; instead it deprives consumers of benefits
The Strait of Hormuz is open! Iran requires paying tolls with bitcoin, while the Persian Gulf is still in “big ship traffic”