US starts clock to bring in ID checks for converting dollars to stablecoins but DeFi stays outside the rules
US regulators have proposed a Customer Identification Program for permitted payment stablecoin issuers under the Bank Secrecy Act, with comments due Aug. 21. The rule would require issuer-side identity checks for direct minting, redemption, custody, and other formal customer relationships, using risk-based procedures similar to bank onboarding. The main issue is that most stablecoin activity happens in the secondary market, through exchanges, wallets, DeFi, smart contracts, and other venues outside the issuer’s direct relationship. Regulators acknowledge that collecting identity information there is difficult. So the proposal creates a two-layer structure: a regulated identity gate at issuance/redemption, and a largely unresolved transfer layer where most usage occurs. The result is not a final solution but the start of a broader fight over whether identity obligations should stay at the issuer gate or extend to secondary-market platforms and intermediaries.
