Fed proposes customer ID rules for stablecoin issuers

Investing.com -- The Federal Reserve announced Thursday a proposal that would require payment stablecoin issuers to maintain customer identification programs aimed at preventing illegal activities.

The plan would create requirements for certain stablecoin issuers similar to those currently applied to banks and credit unions, the Fed said in a statement.

Banking agencies have recently taken steps to integrate cryptocurrency into traditional banking following the passage of the Genius Act last year, a stablecoin framework that became law. Fed Governor Michael Barr expressed concerns that the framework falls short in addressing risks related to illegal finance.

"While some digital asset service providers are subject to anti-money laundering and anti-terrorist financing requirements in their home jurisdiction, it is far too easy for bad actors to evade these restrictions and operate without detection when transacting in digital assets," Barr said. He previously served as the Fed's top bank supervisor.

The proposal will be open for public comment for 60 days.

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