Establishing and maintaining “an effective” customer identification program (CIP) for permitted payment stablecoin issuers (PPSIs) was proposed Thursday by federal banking and credit union regulators, and the Treasury’s financial crimes enforcement unit.
The proposal, issued under the auspices of the 2025 Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), would establish the minimum standards for a PPSI’s CIP. According to the agencies, that would include developing a written program tailored to the PPSI’s size and business, risk-based procedures for verifying the identity of each customer, and procedures to address when a potential or existing customer’s identity cannot be verified.
The proposal was issued jointly by the Federal Deposit Insurance Corp. (FDIC), Federal Reserve, National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC) and Treasury’s Financial Crimes Enforcement Network (FinCEN).
According to a financial institution letter (FIL-29-2026) released by the FDIC, because FDIC-supervised PPSIs will be subsidiaries of parent insured depository institutions (IDIs) with CIP requirements, a PPSI and its parent IDI would generally be able to coordinate compliance practices and share compliance resources.
“The PPSI, as part of the institution as a whole, would be permitted to leverage the parent’s CIP program, so long as the comprehensive program is reasonably designed to identify and mitigate the risks posed by the different aspects of each entity’s business and activities and satisfies each of the requirements to which the PPSI and parent are subject.”
The FDIC letter notes that, under the proposal, the PPSI would also be permitted to develop procedures specifying when it may rely on another federally regulated financial institution’s performance of the CIP procedures for the PPSI’s customer. However, three requirements must be met:
- the reliance is reasonable under the circumstances,
- the other financial institution is subject to an AML/CFT program with CIP requirements and regulated by a Federal functional regulator, and
- the other financial institution has a contractual obligation to annually certify to the PPSI that it has implemented an AML/CFT program and will perform (or its agent will perform) the specified requirements of the PPSI’s CIP.
The proposal has a 60-day comment period which begins when it is published in the Federal Register.
Notice of Proposed Rulemaking: Permitted Payment Stablecoin Issuer Customer Identification Program
Leave a Reply