The Digital Chamber submitted a comment letter to FinCEN and OFAC regarding their proposed rule on AML/CFT and sanctions compliance program requirements for permitted payment stablecoin issuers.
Bringing permitted payment stablecoin issuers, or PPSIs, into a clear BSA/AML framework helps consumers feel confident, helps firms do their part to protect the U.S. financial system and support law enforcement.
At the same time, TDC urged FinCEN and OFAC to clarify the final rule so it reflects how payment stablecoins actually operate. The key point is simple: issuing a payment stablecoin is not the same as intermediating every transaction in which that stablecoin is later used.
Why It Matters
Payment stablecoins can strengthen U.S. payments, expand access to dollar-denominated digital value, and support responsible innovation. The current proposed rules could create obligations that no issuer can realistically meet.
TDC’s letter focuses on several core points:
- PPSIs should be responsible for their own direct activities, such as issuance, redemption, custody, hosted wallet services, or other customer-facing services.
- PPSIs should not be required to monitor, report on, or serve as the compliance intermediary for all secondary-market activity merely because they issued the stablecoin.
- Recordkeeping, Travel Rule, SAR, and sanctions obligations should apply to the entity with the customer relationship, transaction role, custody, control, or legal ability to act.
- Blockchain analytics, digital identity, ecosystem monitoring, and AI-enabled tools can improve compliance, but they should not create broad secondary-market surveillance duties for PPSIs.
- FinCEN and OFAC should provide clearer guidance on when PPSIs must block, freeze, reject, seize, burn, or otherwise prevent transfers.
- Regulators should account for downstream risks to innocent users when stablecoins are frozen, seized, or burned inside decentralized protocols, liquidity pools, automated market makers, or other shared on-chain systems.
TDC’s Take
TDC supports strong AML/CFT and sanctions compliance for stablecoin issuers. But compliance obligations must be tied to the role an issuer actually plays.
When a PPSI directly issues or redeems stablecoins for a customer, it can collect information, screen wallets, use blockchain analytics, conduct due diligence, and maintain records. But once a stablecoin moves through exchanges, custodians, merchants, self-custodied wallets, decentralized protocols, or smart contracts, the issuer often does not know the sender or recipient, does not hold the customer’s assets, and does not control the transaction.
That distinction matters when regulators require an issuer to freeze, seize, burn, or restrict stablecoins. In a custodial setting, that action may affect a specific account or wallet. In a decentralized liquidity pool or automated market maker, the same action could disrupt pricing, liquidity, collateral, or protocol operations for users with no connection to the enforcement target.
TDC also urged FinCEN and OFAC to provide safe harbors or mitigating-factor treatment for PPSIs that act in good faith to comply with lawful orders while taking reasonable steps to limit harm to innocent users, liquidity providers, protocol participants, and other third parties.
Taken together, these stablecoin compliance recommendations will create rules that are both strong and workable.
What’s Next
TDC will continue working with regulators and industry to ensure the final rule aligns realistic compliance obligations with customer relationships and asset control. Done right, the rule can support effective enforcement while giving responsible PPSIs the clarity they need to build in the United States.