Federal Reserve Proposes Bank-Style Identity Verification Rules For Stablecoin Issuers Under GENIUS Act

The Federal Reserve Board requested public comment on a proposal that would require certain payment stablecoin issuers to maintain an “effective customer identification program,” bringing them in line with identity-verification standards long applied to banks and credit unions.

The rule is being issued jointly by the Fed, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Credit Union Administration. Together, the five agencies are implementing a directive from the GENIUS Act, the stablecoin framework signed into law in 2025, which requires permitted payment stablecoin issuers (PPSIs) to be treated as financial institutions under the Bank Secrecy Act and to verify the identity of their account holders.

The proposal would create a new section of federal regulation, 31 CFR Part 1033, covering issuers regulated at the federal level as well as those that opt into state-level supervision under the Act. Comments are due 60 days after the rule is published in the Federal Register.

Key Provisions of the Proposed Rule

Under the draft rule, a stablecoin issuer’s customer identification program would need to collect, before an account is opened, a customer’s name, date of birth (or formation date for entities), a physical address, and an identification number — typically a tax ID for U.S. persons, or a passport or similar government document for foreign customers. P.O. boxes and virtual-office addresses would not satisfy the address requirement.

Issuers would then need risk-based procedures to verify that information, either through documents like a driver’s license or passport, or through non-documentary methods such as cross-checking against consumer reporting agencies or public databases. Regulators are also leaving room for digital identity tools and verifiable credentials, though no specific technical standard is being mandated for now. Identity records would need to be kept for five years after an account closes.

Notably, the agencies clarified that the obligation applies only to direct customer relationships — not to every wallet that merely interacts with an issuer’s smart contract, a distinction aimed at keeping the rule workable for issuers operating on public blockchains.

The proposal follows an earlier advance notice that drew roughly 450 comments from banks, exchanges, and trade groups, and is one piece of a broader set of GENIUS Act rules already advancing at the OCC, FDIC, and NCUA.

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