US Banking Groups Urge Stablecoin AML Rules Be Extended to Secondary Markets

Major US banking groups are urging regulators to extend anti-money laundering rules for stablecoins to secondary-market activity. The push highlights a growing clash between traditional finance and the crypto industry over the direction of US policy.

Decrypt reported on June 11 that the Bank Policy Institute and The Clearing House submitted a joint comment letter to the Financial Crimes Enforcement Network and the Office of Foreign Assets Control, both part of the US Treasury Department.

The groups wrote that most illicit finance involving stablecoins occurs in secondary markets after tokens leave the issuer.

They also argued that the current regulatory framework fails to impose sufficient obligations on DeFi protocols, some digital-asset custodians and exchanges.

They said regulators should move beyond a formal compliance approach focused only on issuance and instead concentrate on closing oversight gaps in secondary markets.

Crypto industry groups including Paradigm and the Hyperliquid Policy Center, or HPC, had previously warned that extending AML responsibility to secondary-market transactions beyond an issuer's control could undermine DeFi innovation.

The split between traditional finance and the digital-asset industry over stablecoin regulation is increasingly putting the future direction of US AML policy at the center of the sector's outlook.