US Banks Push Regulators to Tighten Stablecoin KYC Rules

US banks have urged regulators to tighten know-your-customer (KYC) rules for stablecoin secondary markets, including crypto exchanges. The Bank Policy Institute recently submitted a comment letter to the Financial Crimes Enforcement Network (FinCEN), which is responsible for combating financial crime. BPI's members include major US banks such as JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp., and Wells Fargo & Co.

BPI argued that customer identification program requirements should cover crypto exchanges and platforms not currently under FinCEN's supervisory scope. The organization also urged regulators to bring decentralized finance operators, including decentralized exchanges, under supervision.

The BPI stated that secondary-market operators, such as crypto exchanges, handle substantial trading volume in the stablecoin ecosystem and most illicit activity occurs in this area. This led them to recommend stricter KYC rules for these platforms.