Financial regulators in the United States have introduced a new draft rule aiming to tighten oversight of stablecoin issuers. According to the proposal, companies that issue stablecoins will be required to conduct identity verification and know-your-customer (KYC) checks for their institutional clients. The move is designed to bring leading stablecoin companies closer to the compliance standards long imposed on banks and payment firms.
Draft rules target primary stablecoin markets
On June 18, 2026, the US Federal Reserve, working alongside FinCEN, the OCC, FDIC, and NCUA, published a joint draft rule for stablecoin issuers under the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act). This measure specifically addresses payment-focused stablecoin issuers.
The proposal zeroes in on the primary stablecoin market, where large corporate clients interact directly with issuers for token minting and redemption. Entities such as exchanges, banks, institutional investors, wallet providers, and fintech companies fall into this category. In contrast, individual retail users who buy and sell stablecoins on secondary markets are not directly affected by the new obligations.
This distinction is central to the draft: regulators aim their efforts at major participants who deal directly with issuers, rather than at ordinary investors trading on secondary markets. As a result, the main regulatory burden will be felt during the creation and redemption of tokens.
Current industry practices could become explicit requirements
Industry leaders like Circle already implement stringent checks for their Circle Mint program, requiring institutional verification, linked bank accounts, and transaction thresholds for USDC operations. Similarly, with USDT, Tether only allows verified institutional clients to directly mint or redeem tokens, maintaining a minimum deposit of $100,000.
Under the draft, stablecoin issuers must follow US KYC procedures, starting with a Customer Identification Program. Corporate clients would need to provide identifying information, which issuers must then screen against lists related to terror, sanctions, and illicit finance.
Mini Glossary: FinCEN is a US Treasury unit combating financial crimes. CIP refers to the basic control framework financial institutions use to verify customer identity.
According to the draft, controls that major stablecoin issuers already use will now become formal regulatory obligations, shifting from being merely internal compliance measures to explicit requirements.
Stablecoin issuers near bank-level scrutiny
One of the most notable elements of the proposal is its classification of stablecoin issuers as financial institutions under the Bank Secrecy Act. This expands obligations for combating money laundering and terrorist financing to payment-oriented stablecoin issuers as well.
This approach is consistent with the GENIUS Act passed in July 2025, which already recognized stablecoin issuers as financial institutions for the purposes of sanctions, anti-money laundering, and the Bank Secrecy Act. The new draft now translates these principles into concrete, actionable rules for the industry.
Once the draft is officially published in the Federal Register, a 60-day public comment period will begin, allowing market participants, compliance experts, and industry groups to provide feedback to regulators.
Impact for Tether and Circle under close watch
What makes this proposal especially significant is its formalization of procedures that already exist in the industry. For example, in April 2026, the freezing of $344 million in USDT showed that Tether could cooperate with OFAC and US law enforcement, even without a dedicated CIP rule in place.
This suggests the new regulation aims more to document existing collaboration between issuers and regulators than to build an entirely new system from scratch. Still, the most critical factor will be how effectively issuers adapt to these clearer regulatory requirements.
Tether, in the past, has pushed back against some regulatory frameworks. In Europe, it refused to register under MiCA rules, warning those requirements could pose risks for stablecoins and banking alike. However, because the proposed US rules focus on institutional rather than retail users, major issuers might find this model more acceptable.
