In an effort to combat illegal funding, the US Treasury is proposing new regulations that would subject stablecoin issuers to more stringent financial regulations.
Stablecoin issuers would have to put in place comprehensive anti-money laundering and counterterrorism financing measures under the framework associated with the GENIUS Act. Additionally, they would require systems to keep an eye on transactions and, if needed, freeze or prevent questionable activity.
According to current regulations, the plan essentially considers stablecoin issuers as financial institutions. This implies that they would have to abide by rules like those governing banks, including the execution of sanctions under the supervision of organisations like FinCEN and OFAC.
This could drastically alter how stablecoins function, according to industry experts. Increased compliance might boost confidence, but it might also result in more stringent controls over user cash and transaction limitations.
Regulators also made it clear that although issuer reserves might be safeguarded, stablecoin owners won’t get deposit insurance. Users’ perceptions of risk in the industry may be impacted by this distinction.
The activity takes place at a time when more comprehensive cryptocurrency laws, such as the CLARITY Act, are still on hold. In the meantime, discussions on whether stablecoin rewards should be permitted are still ongoing. According to the White House, prohibiting them would not significantly improve regular bank lending.
The stablecoin industry is undoubtedly moving into a more regulated and compliance-driven stage as authorities move forward.
Source: X.com
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