The Federal Reserve announced a proposal on Thursday that would require issuers of payment stablecoins to maintain customer identification programs to prevent illicit activity.
According to the Fed, the plan would impose requirements on certain stablecoin issuers similar to those currently imposed on banks and credit unions.
Recently, banking regulators have been taking steps to integrate cryptocurrency into the traditional banking system following the passage of the Genius Act, a regulatory framework for stablecoins that has been signed into law. Federal Reserve Governor Michael Barr expressed concern that this framework does not adequately address the risks associated with illicit financing.
"While some digital asset service providers are required to comply with anti-money laundering and counter-terrorist financing requirements in their jurisdictions, it is too easy for bad actors to circumvent these restrictions and operate undetected when conducting digital asset transactions," said Barr, who previously served as the Federal Reserve's top banking regulator.
The proposal will be open for public comment for 60 days.