Two of the most influential U.S. banking trade groups are pressing the Federal Deposit Insurance Corporation to extend anti-money laundering obligations for stablecoin issuers well beyond the
Two of the most influential U.S. banking trade groups are pressing the Federal Deposit Insurance Corporation to extend anti-money laundering obligations for stablecoin issuers well beyond the point of token issuance, setting up a direct clash with crypto industry groups over how far compliance duties should reach.
The Bank Policy Institute (@bankpolicy) and The Clearing House Association (@TCHtweets) filed a joint comment letter on the FDIC's proposed rule to implement Bank Secrecy Act and sanctions compliance standards for FDIC-supervised permitted payment stablecoin issuers. Their submission arrived as the agency's comment window closed on Tuesday.
The banking groups' position is clear: AML obligations should not stop at issuance. BPI and The Clearing House emphasized the meaningful gaps in AML/CFT obligations in the secondary market for payment stablecoins, arguing that most illicit activity occurs there and that current requirements fail to impose sufficient AML obligations on secondary-market actors such as DeFi firms, certain digital asset custodians, and exchanges.
Crypto investment firm Paradigm (@paradigm) and the Hyperliquid Policy Center (@HyperliquidPC) warned U.S. regulators that proposed stablecoin AML rules could push regulated dollar tokens away from permissionless DeFi if issuers are made responsible for secondary-market activity.
In their letter, the two groups argued that the proposal could expose stablecoin issuers to liability for secondary-market transactions they cannot directly control, with their core concern being that issuers may be held responsible for activity taking place through public blockchain smart contracts, even when those issuers do not know the users involved and cannot stop the transaction in real time.
The two groups argued that regulators should separate primary issuance, where issuers have direct customer relationships, from secondary-market activity, where stablecoins move through wallets, decentralized finance apps, and validators outside an issuer's direct control.A wallet address "that simply holds or transfers" a stablecoin should not be treated as an issuer customer, they argued, and developers, protocol operators, and validators should be protected from issuer-style obligations when they have "no direct relationship with the issuer."
According to the two groups, extending strict issuer liability to the secondary market through smart contracts would create "impossible obligations," forcing issuers to launch stablecoins only on permissioned networks and effectively pulling regulated dollar stablecoins out of DeFi, creating a vacuum quickly filled by unregulated offshore alternatives.Unclear rules are described as "especially serious" for validators, as they could be read to cover infrastructure operators on networks such as Ethereum, Solana, and Hyperliquid, potentially pushing U.S.-based staking and infrastructure building offshore.
The FDIC now proceeds to draft a final rule with both camps firmly on record. The outcome will have broad consequences for how dollar-pegged tokens are deployed across open blockchain networks.
Sources:Bank Policy Institute: BPI and The Clearing House Comment on FDIC's BSA and Sanctions Proposal for Stablecoin IssuersDecrypt: Paradigm, Hyperliquid Policy Center Push Back on GENIUS Act Stablecoin AML RuleFinanceFeeds: Hyperliquid Policy Center and Paradigm Push Treasury on AML Rule
