The Blockchain Association in the United States has endorsed the customer identity verification rules under the GENIUS Act, which outlines regulations for stablecoin issuers. While backing the move, the organization emphasized the need for compliance obligations to be clear, enforceable, and non-conflicting.
What Are the Current Discussions on Identity Verification?
The association submitted its opinion letter regarding proposals put forth by the Financial Crimes Enforcement Network, the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corporation, and the National Credit Union Administration. As a leading trade group focusing on policy and regulation within the crypto industry, Blockchain Association plays an integral role in these discussions.
The GENIUS Act establishes a federal framework for payment-centric stablecoins. The bill delineates which entities can serve as issuers, the assets that back their tokens, and how users can redeem them. As part of the regulations, approved issuers are expected to implement a reliable customer identification program.
The Blockchain Association insists that the customer identification obligations should be restricted to primary market transactions between the stablecoin issuer and the user.
According to the organization, this approach will largely exclude peer-to-peer transfers and other secondary market transactions from the issuer’s responsibility for identity verification. This ensures that issuers won’t be obliged to identify every user who trades the token once it’s launched into the market.
How do Definitional Clarifications Impact Regulation?
The Blockchain Association has urged regulatory bodies to clearly define essential terms such as “account,” “customer,” and “digital asset service provider.” The organization also suggested excluding one-time redemption transactions and activities not directly linked to the stablecoin service from the regulation.
Moreover, they highlighted that issuers’ compliance obligations should not overlap. The association argued that providing stablecoin companies with certain flexibility in verifying customer information would be appropriate, given they meet the standards stipulated in the GENIUS Act.
- Customer identity verifications should focus on primary market issuer-customer relationships.
- Secondary market transactions should be largely exempt from issuer responsibilities.
- Clear definitions of fundamental terms must be established.
- Implementation timelines for CIP and AML rules should be synchronized.
Seeking Synchronization for Implementation Timelines
The association recommended coordination among federal agencies regarding the enforcement dates of the proposed customer identification rules and anti-money laundering standards. This proposal aims to alleviate the operational burden on companies preparing for multiple compliance processes simultaneously.
The Blockchain Association views the GENIUS Act as a pivotal initial step for regulating payment stablecoins in the U.S., emphasizing that implementation must consider user protections, enforceable rules, and avenues for innovation.
These insights come at a crucial time as U.S. agencies work toward developing a more detailed regulatory framework under the GENIUS Act. Upon finalization, regulations could clearly define the operating conditions for stablecoin issuers in the United States.
