Banks Say Stablecoin Rules Should Cover Secondary Markets
U.S. banking trade groups are urging regulators to clarify who monitors stablecoin activity after issuance, arguing that current AML rules leave gaps in DeFi, custodians, and exchanges. In joint letters, the Bank Policy Institute and The Clearing House said most illicit activity happens on secondary markets, so oversight should focus there as regulators implement stablecoin rules. They called for “flexibility first” rather than rigid compliance and said permitted stablecoin issuers may not have enough visibility into post-issuance transfers. The comments come after crypto firms warned that broad AML rules could drive regulated dollar tokens out of DeFi. The issue centers on whether issuers should be responsible for transactions they cannot directly control once tokens move into secondary markets. Some DeFi leaders counter that major stablecoins already include freeze, blacklist, and on-chain screening tools, and that offshore exchanges and unhosted wallets pose the bigger risk. Broader oversight could also strengthen trust and attract institutional capital.
