Crypto Lobby Urges US Regulators to Limit Stablecoin KYC

The Blockchain Association has filed a comment letter to US regulators urging them to cap stablecoin KYC (Know Your Customer) at direct customers. The association argues that extending identity-verification duties to peer-to-peer wallet transfers would impose unworkable burdens on the industry as it implements the GENIUS Act.

The proposal, published in June by the Financial Crimes Enforcement Network, the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corporation, and the National Credit Union Administration, aims to establish a Customer Identification Program for permitted payment stablecoin issuers. The association supports the regulators' core framing but wants clearer definitions, protection from duplicative compliance work, and flexibility for digital identity tools.

The association also argues that applying identification rules to every transfer would be 'nearly impossible' for issuers to carry out and could 'cripple the industry.' They estimate that 99% of stablecoin transaction activity occurs in secondary markets, where issuers typically lack any customer data. The regulators themselves acknowledged that applying identification rules to every transfer would be 'nearly impossible.'