The Federal Reserve requested on Thursday that stablecoin payment providers remain registered with customer identification software, a move that signals Washington’s determination to bring the digital financial markets under the same penalty against money fraudulently used by traditional banks – even if the competition authorities finalize the rules before the deadline for approval this coming January.
The an idea may require the so-called permitted payment stablecoin providers, or PPSIs, to collect each new client’s legal name, date of birth or design, address, and government issued identification number before opening an account.
The Federal Reserve framework reflects the CIP responsibility that banks, brokers, mutual funds, and futures traders have been operating under for over twenty years. The administration will receive public comments on the discussion for 60 days.
The actions of the Federal Reserve follow a regulatory framework established by a Genius Act – legally, the Regulation and Implementation of the National Innovation for US Stablecoins Act – which President Trump he signed become law in July 2025.
This landmark law created the first regulatory framework for stablecoins, mandated 100% liquidity and subject issuers to the Bank Secrecy Act for the first time.
The law requires stablecoin issuers to properly implement anti-money laundering, penalty compliance, and customer identification programs. The Genius Act will go into effect on the earliest of January 18, 2027, or 120 days after the federal administration issues its final regulations.
Federal Reserve Governor warns against stablecoins
Federal Reserve Governor Michael Barr appeared as the most cautionary voice in the administration, as his peers welcomed the digital economy with new openness. Speaking in March at the Federalist Society conference in Washington, Barr warned that stablecoins face physical risks around the quality of the stored products, regulatory inconsistencies, anti-money laundering gaps, and financial stability – concerns that he argued the original draft of the Genius Act does not address on its own.
“While some digital service providers have anti-money laundering and counter-terrorism requirements in place in their jurisdictions, it is easy for criminals to evade these restrictions and operate anonymously while selling digital assets,” Barr said in a statement Thursday.
Barr, who previously served as the Federal Reserve bank’s chief policy officer, says that regulatory oversight is a key tool in translating the law’s intent into effective protections.
Thursday’s proposal is the latest in a growing series of rulemakings from several agencies. In April 2026, the Treasury Department’s Financial Crimes Enforcement Network and the Office of Foreign Assets Control. printed The law of entry requires that PPSIs based on written AML and anti-money-terrorist programs and all penalties are followed by the framework.
The rule would take PPSIs out of the existing business class and treat them as a separate class of financial institutions covered by the BSA — a significant change, considering FinCEN’s findings that nearly half of stablecoin issuers have never registered as MSBs.
The FDIC and OCC each issued their own regulatory notices, covering licenses, databases, capital requirements, and standards. The CIP proposal announced on Thursday is separate, complementary to AML laws and sanctions.
Stablecoin rules and nuance
Customer identification requirements have the ability to align with stablecoin markets. Unlike banks, PPSI can face demands for redemption directly from owners who have acquired funds on the secondary market and not through a relationship provided directly.
The proposal agrees with this by defining “account” to include a redemption event, meaning that a person who acquires a stablecoin on an exchange and later redeems it directly with the issuer may trigger CIP liability during that transaction.
Secondary market transactions to which PPSI is not directly affiliated – including transfers made through a smart contract – cannot create an account relationship under the proposed system.
The deadline is tight. With the Genius Act’s effective date set to come as soon as 120 days after the agencies issue their final rules, the window for comments, revisions, and adoptions is being enforced. The final CIP regulations are not expected until 2027, which means the law could go into effect before its customer identification architecture is implemented.
