Blockchain Association calls for clear P2P carve-out in stablecoin customer ID rules

Blockchain Association is urging five U.S. regulators to limit customer identification obligations for permitted payment stablecoin issuers to situations involving a direct relationship with the issuer, and to explicitly exclude independent peer-to-peer transfers from the scope of the rules. The group submitted its comments by the Aug. 21 deadline and published a summary of its views on Aug. 24. It said it supports the agencies' effort to curb illicit use of digital assets, but wants tighter definitions, fewer duplicative compliance checks and greater flexibility to use digital identity technology. FinCEN, the OCC, the Federal Reserve, the FDIC and the NCUA proposed the customer identification program in June under the GENIUS Act. As drafted, the proposal would require permitted payment stablecoin issuers to implement written, risk-based customer identification programs and collect customer names, addresses, dates of birth or formation, and identification numbers, then verify identities through documentary or nondocumentary methods. Records would generally be retained for five years after an account is closed. Blockchain Association said the requirements should apply when an issuer directly issues, redeems, converts, repurchases or provides custody for stablecoins. It asked regulators to draw a firm boundary around independent peer-to-peer transfers, arguing issuers should not be subject to identification duties unless they are intermediating, facilitating or approving the transaction. The proposal generally excludes secondary-market activity from the definition of "customer," with examples including transfers from self-hosted wallets, exchange trades and vendor payments. Agencies estimated that about 99% of stablecoin transaction activity occurs in secondary markets. The group also requested clearer definitions for "accounts," "customers" and "digital asset service providers," and urged regulators to reduce overlapping stablecoin compliance obligations. On digital identity, Blockchain Association backed allowing issuers to use digital identity tools and interoperable technologies. The proposal already permits both documentary and nondocumentary verification methods, and regulators asked whether final rules should recognize digital identities and verifiable credentials. Issuers would be allowed to rely on certain customer checks conducted by federally regulated financial institutions, subject to a contract, annual certification and reasonable procedures. The issuer would still remain responsible for compliance. Regulators will review comments before finalizing the rule. Issuers would have 12 months after publication to comply. The broader GENIUS Act framework is expected to restrict unlicensed payment stablecoin issuance in the U.S. starting Jan. 18, 2027.