US Treasury Proposes AML Rules for Stablecoin Issuers Under GENIUS Act

US Treasury Proposes AML and Sanctions Rules for Stablecoin Issuers – GENIUS Act Implementation Enters Next Phase

Key Takeaways

• The US Treasury has proposed anti money laundering and sanctions rules for stablecoin issuers under the GENIUS Act.
• Issuers would be required to block, freeze, or reject transactions that raise legal or regulatory concerns.
• Stablecoin issuers would be treated as financial institutions under the Bank Secrecy Act.
• The proposal includes a 60 day public comment period before finalization.
• Multiple regulators, including FinCEN, OFAC, the FDIC, and the OCC, are issuing frameworks tied to the GENIUS Act rollout.

Treasury and Financial Crime Agencies Outline Compliance Framework

The US Treasury Department has released a proposal detailing how stablecoin issuers would be expected to manage illicit finance risks under the GENIUS Act. The notice was issued jointly by the Financial Crimes Enforcement Network and the Office of Foreign Assets Control.

The proposed rules would formally bring payment stablecoin issuers into an anti money laundering and sanctions compliance regime. According to the Treasury, the framework is designed to translate provisions of the GENIUS Act, signed into law in July 2025, into operational standards.

Under the proposal, stablecoin issuers would need to establish anti money laundering and counter terrorism financing programs. They would also be required to implement dedicated sanctions compliance systems aligned with existing US legal requirements.

For users of stablecoins in areas such as crypto trading, cross border transfers, or online betting, this would mean that issuers face compliance obligations similar to those imposed on traditional financial institutions.

Obligation to Block, Freeze, or Reject Transactions

A central element of the proposal is the requirement for issuers to build technical capabilities that allow them to block, freeze, or reject transactions flagged for legal or regulatory reasons.

This obligation places stablecoin issuers within the compliance perimeter of the Bank Secrecy Act. As a result, they would be required to assist authorities in detecting and preventing financial crime, including money laundering and sanctions violations.

In practical terms, issuers would need systems capable of identifying suspicious or prohibited transactions and taking direct action at the token level. For platforms that rely on stablecoin payments, including crypto sportsbooks and online casinos, such measures could influence how transactions are processed and monitored.

Each issuer would also be required to appoint a designated individual responsible for overseeing anti money laundering and counter terrorism financing systems. Eligibility for this role would be limited to US based individuals without prior convictions related to financial misconduct, including insider trading, cybercrime, or fraud.

Regulatory Forbearance During Transition Period

While the proposal sets out strict compliance expectations, FinCEN indicated that it generally would not take enforcement action against issuers that have already implemented adequate compliance procedures. This signals a degree of regulatory flexibility as companies adjust to the new framework.

The Treasury has opened a 60 day public comment period, allowing market participants and other stakeholders to provide feedback before the rules are finalized. The final regulatory text will determine how quickly and in what form the new requirements become binding.

GENIUS Act Rollout Involves Multiple US Regulators

The latest proposal forms part of a broader implementation process under the GENIUS Act. The law introduced a structured regime for stablecoin issuance in the United States and is scheduled to take effect 18 months after its signing, or 120 days after supporting regulations are finalized.

Earlier steps have already clarified how supervisory responsibilities will be divided. The Treasury previously outlined that oversight would be shared between federal and state regulators. Smaller issuers may operate under state regimes if they meet standards deemed substantially similar to federal requirements.

Other agencies have also issued guidance linked to the GENIUS Act. One day before the Treasury notice, the Federal Deposit Insurance Corporation introduced its own framework. In February, the Office of the Comptroller of the Currency released related guidance.

The FDIC clarified that holders of stablecoins would not be covered by deposit insurance. However, reserves backing those tokens would remain protected. This distinction is relevant for users who treat stablecoins as cash equivalents within trading accounts or betting balances.

Implications for Stablecoin Issuers and Platform Operators

By classifying stablecoin issuers as financial institutions under the Bank Secrecy Act, the proposal aligns them with traditional compliance standards in the US financial system. Issuers would be subject to structured anti money laundering programs, sanctions screening, and formal oversight responsibilities.

For crypto platforms, including exchanges and gambling operators that accept stablecoin payments, the framework may influence how issuers manage transaction monitoring and enforcement actions. The ability to block or freeze tokens at the issuer level introduces a compliance layer that directly affects payment flows.

The Treasury has framed the proposal as part of a broader effort to protect the US financial system from national security threats while allowing companies to continue operating in the payment stablecoin ecosystem.

Our Assessment

The Treasury proposal marks a concrete step in implementing the GENIUS Act by defining anti money laundering and sanctions obligations for stablecoin issuers. It formally positions issuers within the Bank Secrecy Act framework and requires transaction level controls, compliance officers, and structured oversight. Together with parallel actions by the FDIC and the OCC, the proposal signals coordinated regulatory preparation ahead of the law’s entry into force, with direct relevance for platforms and users that rely on stablecoin payments in the United States.