Stablecoin Regulators Told: Clarify Secondary Market Oversight

Stablecoin issuers are facing pressure from regulators to clarify who oversees transactions after issuance. In a pair of joint comment letters, the Bank Policy Institute and The Clearing House argued that current requirements fail to impose sufficient obligations on decentralized finance (DeFi) firms, digital asset custodians, and exchanges.

The trade groups said most illicit activity occurs after issuance, making secondary market oversight critical. They also stated that regulators should put 'flexibility first,' letting banks focus resources on the most urgent threats while moving away from 'check-the-box compliance' and addressing gaps in stablecoin secondary markets.

This comes after crypto firms Paradigm and the Hyperliquid Policy Center warned earlier this week that broad anti-money laundering rules could push regulated dollar tokens out of decentralized finance. They argued that stablecoin issuers should not be held responsible for activity they cannot monitor or control after tokens move into secondary markets.