Stablecoin Issuers Now Face Bank-Like Gatekeeping Obligations
Stablecoin holders will not be insured by the FDIC, but reserve deposits held by issuers will receive protection. This creates a separate risk shield for the issuers themselves rather than the users. The Treasury's current rulemaking process is part of the implementation of the GENIUS Act, signed into law last July. The act establishes a regulatory pathway for stablecoin issuers, treating them as financial institutions for BSA purposes. To comply, payment stablecoin issuers must run AML/CFT programs and sanctions compliance. This requires the implementation of mechanisms to block, freeze, or reject transactions. As a result, users will experience more frequent wallet freezes, transaction blocking, and asset seizures at scale.
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