bpi

Stablecoin regulation is entering a new phase as U.S. banking groups push for stronger identity and anti-money-laundering requirements beyond stablecoin issuers.
The Bank Policy Institute (BPI), together with The Clearing House, has urged U.S. regulators to address what it sees as regulatory gaps in the secondary market for payment stablecoins. The organizations argue that AML/CFT and sanctions obligations should not focus primarily on stablecoin issuers while leaving exchanges, custodians, digital-asset service providers and other secondary-market participants with weaker requirements.
Why the Secondary Market Matters
Stablecoin activity can broadly be divided into two areas.
The primary market involves direct interactions with an issuer, such as issuing, redeeming, converting or repurchasing stablecoins.
The secondary market covers transactions where users trade or transfer stablecoins without the issuer being a direct party, often through exchanges, intermediaries, wallets or blockchain-based smart contracts. FinCEN itself has recognized that much illicit-finance activity involving payment stablecoins occurs in the secondary market.
This creates a difficult regulatory question: Who should be responsible for identifying the people behind transactions when the stablecoin issuer may not have a direct customer relationship with them?
FinCEN's Current Framework
In June 2026, FinCEN and federal banking agencies proposed customer-identification requirements for permitted payment stablecoin issuers under the GENIUS Act. The proposal would treat permitted payment stablecoin issuers as financial institutions under the Bank Secrecy Act and require effective customer-identification programs.
However, the proposed customer-identification framework primarily focuses on direct, primary-market relationships rather than every secondary-market transfer. This distinction reflects the practical difficulty of requiring an issuer to identify every participant interacting with a stablecoin through blockchain transactions.
BPI's Main Concern
BPI and The Clearing House argue that stronger requirements are also needed for secondary-market actors.
Their position is significant because exchanges, custodians and other digital-asset intermediaries can have direct relationships with retail customers even when the stablecoin issuer does not.
The banking groups therefore want regulators to clarify and strengthen AML/CFT and sanctions responsibilities across the broader stablecoin ecosystem rather than concentrating compliance obligations primarily on issuers.
What This Could Mean for Crypto Markets
If regulators expand identity requirements across secondary markets, crypto users could face greater compliance checks when trading or transferring stablecoins through regulated platforms.
For the industry, the potential benefits include:
- Stronger defenses against illicit finance
- Greater transparency across stablecoin markets
- More consistent AML/CFT standards
- Clearer responsibilities for exchanges and custodians
- Potentially greater confidence from traditional financial institutions
But there are also important challenges. Applying traditional customer-identification rules to decentralized blockchain activity could create significant technical and privacy issues. A blockchain transaction does not automatically reveal the real-world identity or purpose of the people behind the addresses.
The Bigger Picture
The debate highlights a central challenge for the U.S. stablecoin framework: how to combine financial innovation with effective regulatory oversight.
Stablecoins are increasingly being positioned as payment and settlement instruments, while regulators are simultaneously trying to prevent their misuse for money laundering, sanctions evasion and other illicit activities.
The outcome of this debate could influence how exchanges, custodians, stablecoin issuers and decentralized financial platforms operate in the United States.
For crypto investors and market participants, the message is clear: stablecoin regulation is moving beyond the issuer and toward the entire transaction ecosystem.
The next major question is whether regulators can close compliance gaps without creating rules that make blockchain-based payments unnecessarily expensive, restrictive or difficult to use.
The future of stablecoins may depend not only on how they are issued, but also on how regulators oversee what happens after they enter the market.
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