BPI and TCH Comment on GENIUS Act AML and Sanctions Requirements for Payment Stablecoin Issuers

Ladies and Gentlemen:

The Bank Policy Institute^[1] and The Clearing House Association^[2] appreciate the opportunity to comment on the notice of proposed rulemaking (the "NPR") issued by the Financial Crimes Enforcement Network ("FinCEN") and the Office of Foreign Assets Control ("OFAC") regarding the implementation of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the "GENIUS Act").^[3] We also acknowledge FinCEN's separate notice of proposed rulemaking regarding Anti-Money Laundering/Countering the Financing of Terrorism ("AML/CFT") program requirements for financial institutions (the "Program Rule" rulemaking), which promises important improvements to the AML/CFT framework, and which provides relevant context for several of the issues addressed in this letter.^[4]

We appreciate FinCEN's and OFAC's careful consideration of the regulations they are required to issue under the GENIUS Act. As the NPR correctly acknowledges, the implementation of the GENIUS Act raises important policy questions. In particular, the way in which the statute is implemented with respect to AML/CFT and sanctions compliance obligations will affect the integrity of the U.S. financial system, the degree to which malign actors can exploit "Payment Stablecoins"^[5] and related technologies, and the extent to which Payment Stablecoins can develop as mainstream U.S. financial instruments.^[6] In addition, the approach FinCEN and OFAC take to implementing the GENIUS Act may serve as a guiding framework for addressing illicit finance risks stemming from other technological developments and financial innovations around the world, including with respect to other types of digital assets.

The NPR thoughtfully distinguishes between "primary-market" and "secondary-market" Payment Stablecoin activities, and we agree with many aspects of the NPR's approach. We are, however, concerned that the current set of regulatory obligations in the digital asset ecosystem does not impose sufficient AML/CFT and sanctions compliance obligations on secondary-market actors (e.g., digital asset custodians, DASPs, exchanges, and various types of decentralized market participants) comparable to those applicable to banks today.^[7] Although FinCEN recognizes that most illicit stablecoin activity occurs on the secondary market,^[8] the NPR principally imposes obligations on PPSIs, consistent with the GENIUS Act's scope. However, the absence of clear AML/CFT and sanctions compliance obligations for a range of secondary-market actors leaves significant regulatory gaps. FinCEN and OFAC should address those gaps in future rulemakings grounded in existing (or potential future) statutory authority. The changes and clarifications proposed in this letter would build on the NPR's thoughtful approach to addressing this and other considerations.

To read the full comment letter, please click here, or click on the download button below.

[1] The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks, and the major foreign banks doing business in the United States. BPI produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud, and other information security issues.

[2] The Clearing House Association L.L.C., the country's oldest banking trade association, is a nonpartisan organization that provides informed advocacy and thought leadership on critical payments-related issues. Its sister company, The Clearing House Payments Company L.L.C., owns and operates core payments system infrastructure in the United States, clearing and settling more than $2 trillion every business day.

[3] Permitted Payment Stablecoin Issuer Anti-Money Laundering/Countering the Financing of Terrorism Program and Sanctions Compliance Program Requirements, 91 Fed. Reg. 18,582 (Apr. 10, 2026) (the "NPR"); GENIUS Act, Pub. L. No. 119-27, 139 Stat. 419 (2025), codified at 12 U.S.C. §§ 5901-5916.

[4] We address the Program Rule in more detail in a separate letter. Anti-Money Laundering and Countering the Financing of Terrorism Programs, 91 Fed. Reg. 18,704 (Apr. 10, 2026), https://www.govinfo.gov/content/pkg/FR-2026-04-10/pdf/2026-07033.pdf (the "Program Rule").

[5] See 12 U.S.C. § 5901(22) (defining "payment stablecoin" as "a digital asset-(i) that is, or is designed to be, used as a means of payment or settlement; and (ii) the issuer of which-(I) is obligated to convert, redeem, or repurchase for a fixed amount of monetary value, not including a digital asset denominated in a fixed amount of monetary value; and (II) represents that such issuer will maintain, or create the reasonable expectation that it will maintain, a stable value relative to the value of a fixed amount of monetary value," and specifying a payment stablecoin does not include a national currency, a deposit (as defined), or a security (as defined)).

[6] As U.S. Secretary of the Treasury Scott Bessent stated in announcing the NPR, "This proposal will protect the U.S. financial system from national security threats without hindering American companies' ability to forge ahead in the payment stablecoin ecosystem." U.S. Dep't of the Treas., Treasury Proposes Rule to Implement the GENIUS Act's Requirements to Counter Illicit Finance, Treasury press Release (Apr. 8, 2026), https://home.treasury.gov/news/press-releases/sb0435.

[7] Many digital asset exchanges in the United States, for example, are organized as state-licensed money transmitters who do not have formal Customer Identification Program requirements, creating a gap between the obligations that apply to banks and the obligations that apply to those state-licensed money transmitters.

[8] See 91 Fed. Reg. at 18,601 ("Notably, as stated above, FinCEN assesses that the majority of illicit activity involving stablecoins occurs on the secondary market.").