Payment Stablecoin Issuers: Prepare for Bank-Like Customer Identification Requirements

What Happened

The Financial Crimes Enforcement Network (FinCEN) and the federal banking agencies have issued a new joint proposed rule under the Guiding and Establishing National and Innovation for U.S. Stablecoins Act (GENIUS Act). The proposal would implement the provisions of the GENIUS Act requiring permitted payment stablecoin issuers (PPSIs) as “financial institutions” under the Bank Secrecy Act (BSA) to adopt and maintain a customer identification program (CIP) thereunder.

The was published in the June 22, 2026, daily issue of the Federal Register. Comments are due by August 21, 2026.

BSA and Its Application to PPSIs

The BSA refers to a collection of federal laws that, taken together, are intended to prevent money laundering, the financing of terrorism and other illicit uses of financial systems (collectively, financial crimes). It is implemented primarily by regulations adopted by FinCEN, with complementary rules adopted by the federal banking agencies such as the Federal Reserve Board.

The term “financial institution” is defined in the BSA and the FinCEN regulations. Its scope is broader than traditional depository institutions such as banks, and the definition encompasses other entities that can potentially be vehicles for financial crimes, including “money services businesses” such as money transmitters. The GENIUS Act adds PPSIs to the list, and earlier this year, FinCEN and the Office of Foreign Assets Control issued a implementing this provision, including FinCEN proposing a new Part 1033 of its regulations that will cover PPSIs.

The BSA and the FinCEN rules impose a range of obligations on different categories of financial institutions, depending on the perceived risk of financial crimes they present. One of the most significant and burdensome requirements applicable to some—but not all—financial institutions is the adoption and maintenance of a CIP meeting certain minimum standards specified by FinCEN for each financial institution category. The GENIUS Act requires PPSIs to adopt a CIP, and this latest proposed rulemaking would add CIP provisions specific to PPSIs to the newly proposed Part 1033.

The BSA recognizes that one size of CIP standards will not fit all financial institutions, and it directs FinCEN in establishing CIP standards to consider the types of accounts maintained at a category of financial institution and the types of identifying information available, among other factors. In this regard, the Supplementary Information accompanying the proposed rulemaking states that FinCEN and the banking agencies “recognize that these factors may vary significantly by the size and complexity of the PPSI, the activities in which it engages and the types of customers it has. Accordingly, rather than prescribe a one-size-fits-all approach, FinCEN and the Agencies direct that a PPSI’s CIP should address the types of accounts it intends to maintain, how it allows those accounts to be opened and the types of identifying information available as well as “the size and complexity of an issuer.” At the same time, the Supplementary Information highlights concerns regarding instances where payment stablecoins have been used by bad actors to facilitate financial crimes.

After taking these factors into account, the proposal generally would apply CIP minimum standards to PPSIs comparable with those applicable to banks and other traditional financial institutions. These minimum requirements include obtaining a potential new customer’s name, a physical address and a government-issued identification number at account opening, which would be a taxpayer identification number in the case of U.S. persons.

However, the proposal includes a special concept of “account,” recognizing the unique activities in which PPSIs engage. Account opening in the PPSI space would occur in what the proposal refers to as the “primary market,” which would include a PPSI interacting directly with a user or holder of a payment stablecoin, such as when a PPSI engages in “issuing, converting, redeeming, repurchasing, burning, and reissuing payment stablecoins, as well as providing associated services, such as providing custodial services.” On the other hand, a transaction on the “secondary market” generally would not trigger CIP requirements, which the proposal defines as payment stablecoin activity that does not directly involve the PPSI as a party to the transaction other than via a smart contract. Examples of such secondary market activity given in the Supplementary Information include “an individual purchasing payment stablecoins from intermediaries, an individual sending a payment stablecoin from a self-hosted wallet to a vendor to purchase goods, an individual exchanging payment stablecoins for another digital asset via a digital asset exchange, or person-to-person transactions in payment stablecoins.”

The proposal also includes customer verification requirements generally similar to those for banks, while adding provisions recognizing the special nature of PPSIs. In this regard, the proposal would provide flexibility in utilizing digital identity tools, including for example a mobile ID or driver’s license issued by a state.

Why It Matters

A host of proposed and final rules under the GENIUS Act are being issued at a rapid clip by FinCEN, the banking agencies and other designated authorities, including in light of various approaching deadlines. Stablecoins raise novel issues compared with financial products that these regulators have historically dealt with, and the speed and volume of regulatory activity raises concerns. Accordingly, these rules, including this CIP proposal, should be given careful review and consideration by PPSIs and other stakeholders.

As noted above, the proposed CIP provisions are subject to comment through August 21, and stakeholders should consider submitting comments with respect to any CIP features that are perceived as a poor fit for PPSIs or otherwise are unduly burdensome. At the same time, final rules are generally similar to a proposal, and PPSIs should at least begin initial planning for the development of a CIP satisfying the proposed rules.

Please feel free to contact any of the authors or the Manatt professional with whom you usually work if you would like to discuss the CIP proposal further, including options for submitting comments.