Blockchain Association asks regulators to keep stablecoin KYC at the issuer level

The trade group's comment letter was submitted in response to a joint proposal from FinCEN, the OCC, the Federal Reserve, the FDIC and the NCUA. Decrypt reported that the group also supports digital-identity tools, including zero-knowledge proofs, as regulators implement the GENIUS Act.

What the proposal would cover

The agencies' June 18 proposal would treat permitted payment stablecoin issuers as financial institutions for Bank Secrecy Act customer-identification purposes. The Federal Reserve says comments were due 60 days after publication in the Federal Register.

The Blockchain Association's position is narrower than rejecting identity checks altogether. It says issuers should verify direct customers and keep downstream transfers outside the issuer's customer-identification program, while giving firms room to use privacy-preserving identity systems.

A comment letter, not a final rule

The filing changes the policy record but does not change the law or determine the agencies' final rule. It also does not establish that zero-knowledge identity tools will be accepted, or that issuers can avoid other anti-money-laundering, sanctions or reporting obligations.

The material next step is the agencies' response to the comment period. Until a final rule is issued, the defensible claim is that a major crypto trade group has asked regulators to draw the compliance boundary at the issuer-customer relationship.