The U.S. Treasury Department plans to roll out “anti-money laundering regulations for stablecoins”: issuers must have freeze capabilities, pushing implementation of the GENIUS Act

The U.S. Treasury is currently drafting new regulatory rules for stablecoin issuers, requiring them to have the ability to “intercept, freeze, and refuse” illicit transactions, and to comply with the Bank Secrecy Act. This draft—jointly proposed by FinCEN and OFAC—is a key step in the U.S. implementing the GENIUS Act, aiming to protect national security without hindering the development of the stablecoin payments ecosystem.
(Background: The U.S. Federal Deposit Insurance Corporation (FDIC) sets stablecoin regulatory rules: 1:1 reserves, 2-day redemptions, with the GENIUS Act set for countdown to implementation)
(Additional context: Stablecoin transaction volume hit $7.2 trillion in February, first time surpassing the U.S. ACH system! The 24/7, borderless advantage is delivering a blow to traditional banks)

The U.S. government is tightening the regulatory safety net across the stablecoin sector. According to the draft content obtained by CoinDesk, the U.S. Treasury is preparing to introduce a new rule aimed at treating these crypto companies as traditional financial institutions—requiring them to build strong defenses against the use of illicit funds.

Grant “freeze and refuse” authority to implement the GENIUS Act

This proposal, jointly drafted by the Financial Crimes Enforcement Network (FinCEN) under the Treasury and the Office of Foreign Assets Control (OFAC), lays out in detail the in-depth control measures that stablecoin businesses must implement. Issuers will be required to have the ability to carry out “intercept, freeze, and refuse” transactions, and must establish internal safeguards to comply with the Bank Secrecy Act, which governs the U.S. financial system.

This is the most important step the U.S. is taking to implement last year’s first major piece of legislation for the crypto industry—the “U.S. Stablecoin National Innovation Guidance and Establishment Act” (GENIUS Act). The bill is expected to fully take effect in 2027. In a statement, Treasury Secretary Scott Bessent emphasized that the latest move “will protect the U.S. financial system from national security threats while not hindering the ability of U.S. businesses to move forward within the stablecoin payments ecosystem.”

A regulatory show of goodwill: respecting companies’ own risk assessments

It’s worth noting that regulators also signaled goodwill to the industry in this draft. The draft summary states that the new rules focus on “effectiveness,” while acknowledging that “financial institutions are best positioned to identify and assess the risks of money laundering, terrorist financing, and other illicit financing.”

The Treasury argues that as long as companies run an appropriate anti-money laundering compliance program, they can typically avoid penalties from enforcement actions, unless the company shows a “material or systemic failure” to maintain that program. For anti-money laundering, FinCEN expects issuers to prevent flagged specific transactions; for sanctions, OFAC requires issuers to implement safeguards in the primary or secondary markets to block any transactions that might violate U.S. sanctions.