Regulators Propose Stablecoin ID Checks, Leaving Secondary Market Uncertain

US regulators have proposed a new rule that would require stablecoin issuers to implement customer-identification procedures, similar to those used by banks. The proposal, published in the Federal Register on June 22, sets up a comment period that runs through August 21.

The proposed rule aims to make direct minting and redemption of stablecoins more like bank-onboarding processes. It would require permitted payment stablecoin issuers to maintain a written Customer Identification Program (CIP), as part of their anti-money-laundering controls.

However, the proposal leaves secondary-market activity outside the scope of the rule, raising questions about how far identity checks should travel into the places where stablecoins are actually used. This has sparked debate among industry players, with some arguing that regulators are creating a compliance split rather than closing the debate on stablecoin regulation.

The agencies acknowledge the secondary-market problem directly, noting that nearly all transaction activity occurs in this space and that issuers have limited ability to collect information once stablecoins move away from direct interactions. This has sparked concerns among DeFi developers, exchanges, wallet companies, and other industry players about how a broader rule could pressure interfaces, wallet providers, or protocol-adjacent services.