Banks Say Stablecoin Rules Should Cover Secondary Markets

The American Bankers Association (ABA) and the Bank Policy Institute (BPI) submitted comments to the Financial Crimes Enforcement Network (FinCEN) on March 11, 2024, advocating for a targeted approach to Anti-Money Laundering (AML) regulations for stablecoins. These groups propose that AML rules should primarily address higher-risk activities within the stablecoin ecosystem, rather than imposing broad requirements on all participants. A key concern highlighted by the ABA and BPI is the need to close regulatory gaps concerning the secondary markets for stablecoins, which they argue are currently less scrutinized than primary issuance. The organizations emphasize that any new regulations should be risk-based and proportionate to the actual threats posed by stablecoin usage, avoiding unnecessary burdens on legitimate financial activities. They also suggest that existing AML frameworks for traditional financial instruments could serve as a model for stablecoin regulation, ensuring consistency and leveraging established compliance mechanisms. The banking industry's stance aims to balance innovation in digital assets with robust financial crime prevention measures.