The Bank Policy Institute, representing the massive U.S. banking lobby, filed a comment letter asking FinCEN to apply customer identification requirements to secondary stabilization markets, extending the provision applied to stablecoin issuers to exchanges with a direct relationship with retail customers.
Key Takeaways
Major banks urged FinCEN to extend strict identity requirements to secondary stablecoin markets.This would force retail and decentralized exchanges to collect user data under the Bank Secrecy Act.FinCEN notes this is practically challenging due to blockchain anonymity and the lack of central data.The letter recommended that the proposed rule should specify that exchanges and other platforms establishing account relationships with customers to facilitate stablecoin activity are “subject to CIP requirements under the Bank Secrecy Act (BSA).”
If included in the rule, the new provision would put an additional burden on issuers, as the proposed rule itself explains that expanding the information collection to secondary markets would be “practically challenging,” even if it would offer significant benefits.
Decentralized exchanges, referred to as “various types of decentralized market participants” in BPI’s recommendations, would also be included under the secondary market oversight umbrella.
“Blockchains are by nature decentralized algorithms, so there is often no central collection point at which identifying information is collected,” the rule explains, adding that “issuers have a limited ability to collect customer information on the secondary market.”
