# Treasury Launches Rulemaking on Stablecoin AML and Sanctions Compliance Mandates ∞ Regulation

**Published:** 2025-10-29
**Categories:** Regulation

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![The image displays a complex, futuristic apparatus featuring transparent blue and metallic silver components. White, cloud-like vapor and a spherical moon-like object are integrated within the intricate structure, alongside crystalline blue elements](https://incrypthos.com/wp-content/uploads/2025/09/advanced-defi-protocol-engine-algorithmic-stablecoin-liquidity-management.jpeg)

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## Briefing

The U.S. Treasury Department has initiated its rulemaking process for the GENIUS Act via an Advance Notice of Proposed Rulemaking (ANPRM), explicitly targeting the anti-money laundering (AML) and sanctions compliance obligations for Permitted Payment Stablecoin Issuers (PPSIs). This action immediately imposes a strategic requirement on the industry to detail their operational architecture for [illicit finance prevention](https://incrypthos.com/news/illicit-finance-prevention/), specifically seeking input on the technical feasibility and design of programs for customer identification, suspicious activity reporting, and the technical capability to block, freeze, or reject impermissible transactions, including those involving sanctioned entities. The process demands all stakeholders submit comments by the critical deadline of November 4, 2025, to directly influence the final compliance burden.

![A detailed close-up reveals an intricate electronic and mechanical assembly, featuring a prominent silver module at its core, surrounded by a dense network of bright blue tubes and dark metallic components. The background is a soft, out-of-focus array of blue and black bokeh, highlighting the foreground's sharp technological detail](https://incrypthos.com/wp-content/uploads/2025/09/Blockchain-Infrastructure-Decentralized-Consensus-Mechanism-Secure-Data-Flow.jpeg)

## Context

Prior to the GENIUS Act, payment stablecoins operated within a patchwork of state-level money transmission licenses and an ambiguous federal framework, lacking a cohesive, explicit mandate for Bank Secrecy Act (BSA) and sanctions compliance tailored to their unique distributed ledger structure. The prevailing compliance challenge centered on translating traditional financial institution (FI) requirements ∞ such as wire transfer information requirements ∞ to a decentralized, tokenized environment, creating legal uncertainty and potential [regulatory arbitrage](https://incrypthos.com/news/regulatory-arbitrage/) between domestic and foreign issuers. The ANPRM directly addresses this by making stablecoin issuers explicitly subject to all federal laws applicable to U.S. financial institutions relating to sanctions and AML.

![A luminous white sphere sits at the heart of a vibrant, spiky formation of blue and white crystals. These sharp, angular structures radiate outwards, mimicking the complex, multi-layered architecture of blockchain technology](https://incrypthos.com/wp-content/uploads/2025/09/Decentralized-Ledger-Architecture-Crystallized-Protocol-Core-Network-Dynamics.jpeg)

## Analysis

This rulemaking fundamentally alters the PPSI compliance framework by moving beyond policy to mandate technical system integration. Issuers must now prove not only that they have internal AML/KYC policies, but that their core product architecture possesses the technical controls to execute lawful orders, such as freezing or seizing assets, which is a significant operational lift for [on-chain compliance](https://incrypthos.com/news/on-chain-compliance/). The requirement for foreign issuers to demonstrate a “comparable regulatory regime” is designed to mitigate regulatory arbitrage, forcing global stablecoin providers to conform to U.S. standards to access the U.S. market. This focus on technical capability creates a new, non-negotiable parameter for product structuring, shifting the compliance burden from merely reporting to active, on-chain enforcement.

![This image displays a sophisticated blue and black modular hardware system, featuring intricate components, exposed wiring, and a prominent "P" emblem on a gray panel. The unit exhibits a high level of mechanical detail, including various bolts, connectors, and internal structures, emphasizing its complex engineering](https://incrypthos.com/wp-content/uploads/2025/09/Interconnected-Modular-Blockchain-Node-Protocol-Infrastructure-Design.jpeg)

## Parameters

- **Comment Submission Deadline** ∞ November 4, 2025. This is the final date for industry stakeholders to submit formal input on the proposed rules.

- **Reserve Requirement Standard** ∞ 100% backing with U.S. dollars or short-term Treasuries. This is the statutory reserve floor established by the [GENIUS Act](https://incrypthos.com/news/genius-act/).

- **Mandated Technical Capability** ∞ Ability to seize, freeze, or burn payment stablecoins. This is a core new operational requirement for [sanctions compliance](https://incrypthos.com/news/sanctions-compliance/).

- **Targeted Entities** ∞ Permitted [Payment Stablecoin Issuers](https://incrypthos.com/news/payment-stablecoin-issuers/) (PPSIs). These are the only entities authorized to issue payment stablecoins in the U.S. after the Act’s effective date.

![A close-up view reveals a sophisticated array of white, dark grey, and translucent blue components, meticulously interlinked within a futuristic technological framework. Angular white panels and dark grey modules, some bearing abstract indicators, suggest a highly structured decentralized finance DeFi protocol infrastructure](https://incrypthos.com/wp-content/uploads/2025/09/modular-consensus-mechanism-data-flow-interface.jpeg)

## Outlook

The next phase involves Treasury synthesizing public comments to draft a Notice of Proposed Rulemaking (NPRM), with a final rule on capital, liquidity, and risk management requirements due within 18 months of the Act’s passage. This ANPRM sets a clear precedent ∞ the future of regulated digital assets requires a technical capacity for centralized enforcement (freezing/blocking) to satisfy [illicit finance](https://incrypthos.com/news/illicit-finance/) concerns, which will likely become the global standard for any jurisdiction seeking to integrate stablecoins into its traditional financial system. This development will accelerate the market’s bifurcation between fully compliant, permissioned stablecoins and decentralized, un-governed alternatives.

**The Treasury’s ANPRM decisively integrates stablecoin issuance into the core U.S. financial security apparatus, making verifiable, technical sanctions enforcement a mandatory operational pillar for market access and legitimacy.**

Payment Stablecoin Issuers, Anti-Money Laundering, Sanctions Compliance, Bank Secrecy Act, Financial Crimes Enforcement, Illicit Finance Prevention, Technical Compliance Mandates, Transaction Blocking Capability, Reserve Requirements, Federal Regulatory Framework, Digital Asset Policy, Stablecoin Reserve Standards, Foreign Issuer Requirements, Regulatory Arbitrage Risk, Customer Due Diligence, Public Disclosure Requirements, Risk Management Standards, Payment System Integration, On-chain Compliance, Regulatory Comment Period Signal Acquired from ∞ <a href="https://www.mayerbrown.com/en/insights/publications/2025/10/treasury-takes-initial-steps-towards-genius-act-rulemaking?utm_source=incrypthos.com&utm_medium=referral&utm_campaign=noo-engine.com" target="_blank" rel="nofollow">mayerbrown.com</a> 

## Micro Crypto News Feeds

<a href="https://incrypthos.com/news/illicit-finance-prevention/" class="glossary-item-box">

## illicit finance prevention 

Definition ∞ Illicit finance prevention refers to measures taken to stop illegal financial activities, including money laundering and terrorist financing. </a><a href="https://incrypthos.com/news/regulatory-arbitrage/" class="glossary-item-box">

## regulatory arbitrage 

Definition ∞ Regulatory Arbitrage describes the practice of exploiting differences in regulations between jurisdictions or market segments to gain a competitive advantage or reduce compliance costs. </a><a href="https://incrypthos.com/news/on-chain-compliance/" class="glossary-item-box">

## on-chain compliance 

Definition ∞ On-chain compliance refers to the adherence to regulatory and legal requirements directly within the operations of a blockchain network or decentralized application. </a><a href="https://incrypthos.com/news/genius-act/" class="glossary-item-box">

## genius act 

Definition ∞ The GENIUS Act refers to hypothetical legislative action proposed to establish a comprehensive regulatory framework for digital assets. </a><a href="https://incrypthos.com/news/sanctions-compliance/" class="glossary-item-box">

## sanctions compliance 

Definition ∞ Sanctions compliance involves adhering to laws and regulations that restrict financial transactions or dealings with specific entities, individuals, or countries. </a><a href="https://incrypthos.com/news/payment-stablecoin-issuers/" class="glossary-item-box">

## payment stablecoin issuers 

Definition ∞ Payment stablecoin issuers are entities that create and manage digital tokens designed to maintain a stable value for use in transactions. </a><a href="https://incrypthos.com/news/illicit-finance/" class="glossary-item-box">

## illicit finance 

Definition ∞ Illicit Finance refers to financial activities that are conducted outside the bounds of legal and regulatory frameworks, often involving criminal proceeds. </a>

**Tags:** [Sanctions Compliance](https://incrypthos.com/news/sanctions-compliance/), [Financial Crimes Enforcement](https://incrypthos.com/news/financial-crimes-enforcement/), [Bank Secrecy Act](https://incrypthos.com/news/bank-secrecy-act/), [Payment System Integration](https://incrypthos.com/news/payment-system-integration/), [Anti-Money Laundering](https://incrypthos.com/news/anti-money-laundering/), [Stablecoin Reserve Standards](https://incrypthos.com/news/stablecoin-reserve-standards/)	

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### [AUDD Stablecoin Redefines Global Merchant Settlements and Trade Efficiency](https://incrypthos.com/web3/audd-stablecoin-redefines-global-merchant-settlements-and-trade-efficiency/)
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AUDD's integration across multiple networks establishes a new paradigm for programmable, real-time cross-border payments, directly addressing traditional trade finance friction.

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### [JPMorgan Launches JPMD for Institutional Digital Cash Settlement](https://incrypthos.com/adoption/jpmorgan-launches-jpmd-for-institutional-digital-cash-settlement/)
![Close-up reveals interconnected white and blue modular components, symbolizing a robust distributed ledger technology architecture. These units suggest sharding implementation, where individual modules represent network nodes facilitating parallel transaction processing. The metallic interfaces highlight secure cross-chain interoperability, essential for scalable Web3 infrastructure. This physical representation evokes efficient data flow and cryptographic security within a decentralized ecosystem, crucial for high-throughput blockchain operations.](https://incrypthos.com/wp-content/uploads/2025/09/cryptographic-sharding-modules-enabling-secure-cross-chain-interoperability.jpeg)

JPMD digitizes commercial bank deposits on-chain, enabling instant settlement and enhancing collateral mobility for institutional clients.

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### [Aave Integrates Maple Yield-Bearing Stablecoins Unlocking Institutional Credit for DeFi](https://incrypthos.com/web3/aave-integrates-maple-yield-bearing-stablecoins-unlocking-institutional-credit-for-defi/)
![A close-up of an intricate, translucent blue housing revealing a polished metallic internal mechanism. A hexagonal nut secures a central shaft featuring a precise keyway and bearing assembly, hinting at a robust, engineered component. The transparent outer layer contrasts with the opaque, functional core, symbolizing the visible yet complex inner workings of a system. This visually represents a cryptographic primitive's underlying protocol mechanism, essential for decentralized autonomous organization DAO governance and secure smart contract execution within a Web3 infrastructure. The design suggests precision engineering crucial for on-chain verifiable computation.](https://incrypthos.com/wp-content/uploads/2025/09/Cryptographic-Protocol-Mechanism-Powering-Decentralized-Smart-Contract-Execution.jpeg)

The Aave-Maple integration tokenizes institutional credit pools as collateral, structurally improving capital efficiency and deepening DeFi's institutional bridge.

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![Intricate metallic components, resembling sophisticated mining rig or validator node hardware, are partially enveloped by a vibrant, textured, translucent blue substance. This visual metaphor illustrates advanced liquid cooling systems crucial for maintaining optimal hash rate and transaction processing efficiency within a decentralized network. The robust engineering signifies the foundational computational power supporting blockchain scalability and smart contract execution. The dynamic blue texture represents the fluid flow of digital assets or energy consumption within a consensus mechanism, emphasizing protocol integrity.](https://incrypthos.com/wp-content/uploads/2025/09/blockchain-computational-protocol-liquid-cooling-decentralized-infrastructure-visualized.jpeg)

This initiative establishes a secure, interoperable settlement layer for tokenized assets, enhancing capital efficiency and mitigating counterparty risk for institutional participants.

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### [Treasury Sanctions Iranian Shadow Banking Network Exploiting Cryptocurrency for Illicit Funding](https://incrypthos.com/regulation/treasury-sanctions-iranian-shadow-banking-network-exploiting-cryptocurrency-for-illicit-funding/)
![A close-up view displays a blue bevel gear and metallic bearing components, partially enveloped by a white, frothy substance. This visual metaphorically represents a protocol cleansing mechanism in a distributed ledger technology DLT environment. The intricate gear teeth, interacting with the foam, symbolize the continuous transaction scrubbing and optimization of network throughput. Metallic elements suggest robust cryptographic integrity and the foundational consensus mechanism ensuring system health and efficiency within the decentralized finance DeFi ecosystem.](https://incrypthos.com/wp-content/uploads/2025/09/Blockchain-Protocol-Cleansing-Mechanism-Digital-Asset-Friction-Reduction.jpeg)

OFAC's latest action mandates heightened due diligence on digital asset transactions to counter sophisticated sanctions evasion.

- 
### [SEC Staff Clarifies State Trust Companies Qualify as Digital Asset Custodians](https://incrypthos.com/regulation/sec-staff-clarifies-state-trust-companies-qualify-as-digital-asset-custodians/)
![A transparent, fluid-filled vessel displays dynamic blue liquid and effervescent bubbles, set within a sophisticated metallic and dark blue framework. This visual metaphor illustrates the intricate processes of a smart contract execution. The swirling blue elements symbolize the transaction flow and data packets within a decentralized network. Bubbles represent individual cryptocurrency transactions or oracle data inputs, actively processed within a secure on-chain protocol environment. The robust, high-precision base suggests a layer-2 scaling solution or an enterprise blockchain infrastructure, emphasizing system integrity and efficiency in digital asset management.](https://incrypthos.com/wp-content/uploads/2025/09/Smart-Contract-Execution-Flow-Dynamics-Interface.jpeg)

The SEC Staff's no-action relief provides a critical, compliant pathway for Registered Investment Advisers to custody client digital assets via state-chartered trusts.

- 
### [U.S. Enacts GENIUS Act, Federally Regulating Stablecoin Issuance and Reserves](https://incrypthos.com/regulation/u-s-enacts-genius-act-federally-regulating-stablecoin-issuance-and-reserves/)
![A clear, complex, interwoven transparent structure dominates the foreground, resembling a sophisticated algorithmic framework. Behind it, a deep blue, blurred form suggests underlying data streams or a core digital asset pool. This visualization abstractly represents the intricate protocol architecture essential for decentralized ledger technology DLT. Its transparent nature reflects the auditability and immutability inherent in cryptographic primitives, while the interwoven design signifies robust interoperability and the secure execution of a distributed consensus mechanism within a blockchain network.](https://incrypthos.com/wp-content/uploads/2025/09/Transparent-Blockchain-Protocol-Framework-Algorithmic-Structure-Visualization.jpeg)

The GENIUS Act establishes a federal framework for stablecoins, mandating 1:1 asset backing and regular audits, fundamentally altering compliance for issuers.

- 
### [US, UK Establish Joint Task Force for Digital Asset Regulatory Alignment](https://incrypthos.com/regulation/us-uk-establish-joint-task-force-for-digital-asset-regulatory-alignment/)
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This transatlantic initiative signals a strategic shift towards harmonized digital asset policy, demanding proactive engagement from regulated entities.

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### [SEC Staff Permits State Trust Companies as Crypto Qualified Custodians](https://incrypthos.com/regulation/sec-staff-permits-state-trust-companies-as-crypto-qualified-custodians/)
![A sleek, brushed metallic device features transparent sections revealing intricate, glowing blue internal components. This advanced cryptographic module represents a secure element for digital asset custody, designed to protect private keys and facilitate immutable transaction signing. Its robust hardware architecture ensures cold storage security, crucial for safeguarding blockchain assets within a decentralized infrastructure. The luminous internal structure symbolizes active cryptographic operations and secure data processing, vital for maintaining trustless environments.](https://incrypthos.com/wp-content/uploads/2025/09/next-gen-hardware-wallet-cryptographic-module-for-immutable-transactions.jpeg)

The SEC's no-action letter redefines crypto custody, allowing state trust companies to serve as qualified custodians for regulated entities, enhancing operational clarity.

**Tags:** [Anti-Money Laundering](https://incrypthos.com/news/anti-money-laundering/), [Bank Secrecy Act](https://incrypthos.com/news/bank-secrecy-act/), [Customer Due Diligence](https://incrypthos.com/news/customer-due-diligence/), [Digital Asset Policy](https://incrypthos.com/news/digital-asset-policy/), [Federal Regulatory Framework](https://incrypthos.com/news/federal-regulatory-framework/), [Financial Crimes Enforcement](https://incrypthos.com/news/financial-crimes-enforcement/), [Foreign Issuer Requirements](https://incrypthos.com/news/foreign-issuer-requirements/), [Illicit Finance Prevention](https://incrypthos.com/news/illicit-finance-prevention/), [On-Chain Compliance](https://incrypthos.com/news/on-chain-compliance/), [Payment Stablecoin Issuers](https://incrypthos.com/news/payment-stablecoin-issuers/), [Payment System Integration](https://incrypthos.com/news/payment-system-integration/), [Public Disclosure Requirements](https://incrypthos.com/news/public-disclosure-requirements/), [Regulatory Arbitrage Risk](https://incrypthos.com/news/regulatory-arbitrage-risk/), [Regulatory Comment Period](https://incrypthos.com/news/regulatory-comment-period/), [Reserve Requirements](https://incrypthos.com/news/reserve-requirements/), [Risk Management Standards](https://incrypthos.com/news/risk-management-standards/), [Sanctions Compliance](https://incrypthos.com/news/sanctions-compliance/), [Stablecoin Reserve Standards](https://incrypthos.com/news/stablecoin-reserve-standards/), [Technical Compliance Mandates](https://incrypthos.com/news/technical-compliance-mandates/), [Transaction Blocking Capability](https://incrypthos.com/news/transaction-blocking-capability/)

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**Original URL:** https://incrypthos.com/regulation/treasury-launches-rulemaking-on-stablecoin-aml-and-sanctions-compliance-mandates/
