Crypto Lobby to Regulators: Don't Stretch Stablecoin KYC to Peer-to-Peer Transfers

The Blockchain Association has urged federal regulators to keep stablecoin identity checks where the customer relationship actually exists — between issuers and the people who mint and redeem with them — warning that extending requirements to peer-to-peer transfers could cripple the industry.

The August 21 comment letter, signed by CEO and former CFTC commissioner Summer K. Mersinger, responds to the customer identification program rules proposed jointly by FinCEN, the OCC, the Federal Reserve, the FDIC, and the NCUA under the GENIUS Act — the stablecoin framework signed into law in June of last year.

Where the line sits

The five agencies' June proposal drew the line at the primary market: issuers must verify the customers they deal with directly, while secondary transfers between wallets fall outside the requirement. The Association's letter endorses that boundary and asks the agencies to make its limits explicit, so that the obligation cannot creep downstream to cover every wallet a stablecoin later passes through.

The industry's argument is practical as much as principled: an issuer has no relationship with, and no visibility into, the millionth holder of a token it minted for someone else. Imposing identification duties there would make permissionless transfer — the property that makes stablecoins useful as payment rails — legally impossible.

The stakes of the fine print

This rulemaking is where the GENIUS Act stops being a slogan and becomes plumbing. The comment window closed August 21, and the final rule will define compliance costs for every licensed issuer — and, indirectly, whether US-regulated stablecoins can compete with offshore alternatives that carry no such overhead.

With bank-issued stablecoins from the likes of SoFi and Revolut entering the market and the Senate's CLARITY Act vote looming in September, the industry is discovering that winning the legislation was the easy half. The rules are where the fight actually lives.