During the comment period, which closed Tuesday (Aug. 4), banks’ responses showed broad support for regulated stablecoin issuance. They also exposed unresolved questions about transaction visibility, redemption, third-party oversight and the division of compliance responsibilities across the payments ecosystem.
The FDIC’s proposal centers on Bank Secrecy Act and sanctions compliance standards for permitted payment stablecoin issuers (PPSIs) it supervises. It would place Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) requirements inside the FDIC’s supervisory and enforcement framework for stablecoin issuers affiliated with state nonmember banks and state savings associations, and require the FDIC to notify FinCEN at least 30 days before certain supervisory or enforcement actions.
Visibility Follows Control
In its letter, the Independent Community Bankers of America drew a boundary between a stablecoin issuer and a bank that provides it with ordinary services.
A community bank holding reserve or operating accounts should monitor its customers, accounts and transactions. It should not “be expected to police secondary-market transfers, wallet-level activity or product-specific risks” outside its control, the ICBA letter said. Blockchain analytics, wallet screening and stablecoin-specific transaction monitoring should remain issuer responsibilities.
That allocation has consequences for banks and FinTechs throughout the payments chain. A FinTech wallet, exchange or payment intermediary may possess customer and transaction data that the issuer lacks. The issuer may still bear regulatory responsibility for controls performed by that intermediary. ICBA therefore recommended in its letter continuing due diligence on third parties and said outsourcing identity checks, screening or monitoring should not relieve the issuer of accountability.
The group called for issuers to test monitoring systems, document alert thresholds, assess false positives and false negatives, preserve investigation records and demonstrate how alerts were escalated or closed. It also opposed exemptions unless they provide “equivalent transparency, traceability, and enforcement value,” per the letter.
International Bancshares Corp. described strong anti-money laundering and sanctions standards as necessary in its letter, but it said the proposal covers only one component of stablecoin risk. It cited fraud, consumer harm, sanctions evasion, deposit displacement and wider instability as concerns that cannot be resolved simply by applying existing compliance rules to a new product.
Sanctions Controls Must Operate at Payment Speed
Sanctions screening is where the difference between policy and execution becomes clearest.
ICBA said in its letter that stablecoin issuers should be able to identify, block, freeze or reject prohibited activity and should account for mixers, wallet obfuscation, chain-hopping, sanctioned jurisdictions and transfers that cross between on-chain and off-chain systems. Periodic screening against a sanctions list would not be enough.
The letter placed responsibility on product design as well as compliance staffing.
“If a PPSI designs a product that can move value across wallets, platforms or jurisdictions faster than its sanctions controls can operate, that design choice should not become a basis for reduced accountability,” the letter said.
Redemption Strains the Framework
Redemption produced the clearest example of a rule that could work on paper but falter under stress.
In a joint letter, the Bank Policy Institute and The Clearing House said the proposed framework leaves an important gap once payment stablecoins move beyond the issuer into the secondary market. While the FDIC proposal focuses on supervised issuers, the associations contend that exchanges, custodians, digital asset service providers and other intermediaries that facilitate secondary-market transactions should also face clearer AML and sanctions obligations. Without that clarification, banks may remain responsible for managing risks created by payment activity over which they have limited information or control.
A holder may acquire stablecoins through an exchange or wallet without having a direct relationship with the issuer. If the exchange fails or suspends withdrawals, that holder may approach the issuer for cash. The issuer must then identify and screen a person it may never have seen before, while processing a potentially large volume of requests.
ICBA found tension between that obligation and a framework that may not require issuers to monitor secondary-market activity continuously. It urged the FDIC to require contingency procedures covering identification, sanctions screening, suspicious activity escalation, staffing, liquidity and communications.
State-Chartered Banks Face a Test
The comments show banks asking the FDIC to apply familiar supervisory principles without assigning an institution responsibility for transactions it cannot see or control. The banks said stablecoin regulation should assign compliance obligations according to who has the information and operational control to carry them out.
That approach could give state-chartered banks a viable path into stablecoin issuance, reserve banking, custody and payment services. It could also leave them behind federally supervised issuers if overlapping FDIC, FinCEN and OFAC processes produce slower decisions or uncertain obligations.
The FDIC’s final rule will help settle how much of a stablecoin payment a bank must be able to see, which controls FinTech partners may perform, and whether redemption rights hold up once markets come under strain.