Blockchain Association Requests Amendments to KYC Rules for Stablecoin Issuers

Key Points of This Article

• Request to exclude four types, including one-time redemptions, from account definitions
• Request to align the implementation timeline with AML rule proposals

Opinion on KYC Rule Proposal of the GENIUS Act

On the 21st, the Blockchain Association (BA), a U.S. blockchain industry group, submitted an opinion letter to five U.S. authorities, including FinCEN (Financial Crimes Enforcement Network), regarding the KYC (Know Your Customer) rule proposal for authorized payment stablecoin issuers (PPSI) based on the GENIUS Act.

The rule proposal was published in the Federal Register on June 22, officially titled "Customer Identification Program (CIP) Rule Proposal." It limits the KYC obligations to the primary market where PPSIs directly transact with customers. While the BA supports this design, it has requested clarifications on several points, including the definition of accounts and methods of information collection.

Support for Primary Market Limitation Policy

The opinion letter points out that PPSIs do not have the technical means to identify transaction parties in the secondary market, where issued stablecoins circulate among third-party wallets. It stated that it "strongly supports" the authorities' policy against expanding obligations to the secondary market.

As a basis, it cited that the GENIUS Act explicitly limits the verification targets to "account holders with the issuer," arguing that there is no legal basis for imposing verification obligations on parties in the secondary market.

Request for Clarification on Account Definitions and Implementation Timeline

Regarding the definition of "account," the BA requested the exclusion of four types from the scope: one-time redemption transactions, relationships with vendors and other business contractors, businesses other than stablecoins, and redemptions through other regulated financial institutions. It cited consistency with existing KYC rules of banks and others as a basis.

Additionally, it requested that if PPSIs reasonably rely on KYC procedures of other institutions, they should not be held responsible for deficiencies of those institutions, and that a mechanism for obtaining identification information electronically and indirectly should be clarified.

Regarding the implementation timeline, it has requested alignment with the timelines of ongoing rule proposals for anti-money laundering measures and sanctions compliance programs by the Financial Crimes Enforcement Network and OFAC (Office of Foreign Assets Control).

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