Implement the Genius Act! The U.S. will regulate stablecoin issuers and require the ability to freeze transactions for “anti–money laundering” purposes

The U.S. Department of the Treasury has formally 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 oversight must be a U.S. resident with no criminal record.

The Treasury joins two major agencies to implement oversight, and stablecoin businesses are officially listed as financial institutions

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

At the core of this regulatory framework is defining “permissioned 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 top priority is to protect the U.S. financial system from national security threats, while also ensuring U.S. companies can continue to maintain competitiveness in the stablecoin payment ecosystem.

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

Strengthen anti-money-laundering and sanctions compliance, and grant issuers authority to freeze transactions

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 counter-terrorist financing (CFT) programs, and have the capability to proactively detect and report suspicious activity. The new rule specifically requires that issuers, at the technical level, have the authority to “intercept, freeze, and refuse” certain transactions, so they can, in response to requests from law enforcement agencies, block the flow of funds linked to illegal actors.

Snir Levi, CEO of blockchain intelligence firm Nominis, said these changes will turn issuers into gatekeepers similar to banks, 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 fit their purpose. The official will adjust standards based on the issuer’s size and the complexity of its business, aiming to strike a balance between fighting crime and promoting technical research and development, while avoiding an excessive administrative burden on the industry.

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

To ensure the compliance program is effectively implemented, the proposal sets strict thresholds for staffing arrangements at issuers. In the future, stablecoin issuers must assign dedicated personnel to oversee defenses against money laundering and terrorist financing systems. This responsible person must live within the United States, and it is strictly prohibited for anyone with a criminal record—such as insider trading, cybercrime, or financial fraud—to hold this position. In addition to the Treasury, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) have also issued related implementing details.

In its proposal, the FDIC specifically clarified that although 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 requirements are fully implemented, a tiered digital cash ecosystem would be established within the banking system, and the lines between traditional banks and digital assets would overlap even more.

• Related news: New FDIC rules in the U.S.! Stablecoin reserves have strict requirements and are not covered by the $250k deposit insurance per person

Market outlook and political wrangling: 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 rule details to be finalized. Despite rising regulatory pressure, the industry broadly believes that clarifying regulations will help stablecoin assets move into the mainstream market. According to a Chainalysis report, by 2035, the annual trading volume of stablecoins could surge to $1,500 trillion.

Source: Chainalysis Chainalysis predicts that by 2035, the annual trading volume of stablecoins could surge to $1,500 trillion

However, political wrangling has not stopped. The Senate’s debate over the CLARITY Act remains deadlocked. The White House Council of Economic Advisers opposes a ban on stablecoin interest earnings, arguing the ban would do little to protect bank lending and would instead increase costs for users.

On the international front, Iran recently announced a plan to charge a $1-per-barrel Bitcoin ($BTC) toll for oil tankers transiting the Strait of Hormuz in order to evade sanctions. This kind of illegal financial risk stemming from geopolitical conflicts is prompting the U.S. Treasury to accelerate the establishment of stringent control mechanisms through the GENIUS Act.

Further reading
White House research: Banning stablecoin interest is almost useless for protecting bank loans—it instead strips consumers of benefits
The Strait of Hormuz is open! Iran requires paying tolls with bitcoin, and the Persian Gulf is still “stuffed with ships”