A proposed rule to require payment stablecoin issuers to maintain customer identification programs, or CIPs, must go further if it is to reflect those firms’ business models and ensure equal treatment for all financial institutions, the American Bankers Association said today.
Earlier this year, the Financial Crimes Enforcement Network and federal banking agencies jointly proposed rulemaking to require stablecoin issuers to maintain CIPs, as required by the Genius Act.
In a letter to regulators, ABA raised three concerns with the rule, along with recommendations on how to improve it:
- CIP obligations should not be limited to customers with whom issuers have a “formal relationship,” a banking concept that does not fit their business model, ABA said. Instead, the rule should state that purchasing or redeeming a payment stablecoin directly from the issuer first requires opening an account with the firm and triggers CIP requirements.
- Illicit finance risk must be managed in both primary and secondary markets, the association said. Requiring prospective customers to open accounts with the issuer before direct purchase from or redemption by the firm would allow issuers to reject customers who decline to provide CIP information, provide obviously fraudulent information or otherwise fail onboarding standards.
- CIP collection requirements should remain uniform across financial institutions, ABA said. Adding an unexplained “date of formation” requirement for legal entity customers creates uncertainty and could interfere with issuers’ ability to rely on CIP collected by other financial institutions, including their own parent banks.
ABA also believes that digital exchanges should have CIP requirements.
“ABA supports the responsible development of payment stablecoin markets on terms that are safe, sound and compliant with U.S. law,” the association said. “We have a significant interest in ensuring that the regulatory framework established by the Genius Act is clear, workable and appropriately calibrated, and that the rules designed to protect the U.S. financial system and U.S. national security are appropriately tailored, but broadly applicable across payment forms and types of financial institutions.”
