Blockchain Association: Exclude P2P from Stablecoin ID Rules

Blockchain Association asks regulators to keep P2P transfers outside stablecoin ID regime

The Blockchain Association has urged five U.S. regulatory agencies to clarify that customer identification requirements under the GENIUS Act should apply only to direct relationships between permitted payment stablecoin issuers and their customers — not to independent peer-to-peer (P2P) transfers that occur on secondary markets. The trade group supports robust anti-money laundering (AML) and know-your-customer (KYC) checks at the primary market level but warned regulators against imposing identification obligations that would reach downstream token holders who never interact with the issuer.

What regulators proposed

In June 2026, five agencies — FinCEN, the Office of the Comptroller of the Currency (OCC), the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) — jointly proposed a written, risk-based customer identification program for permitted payment stablecoin issuers as part of the GENIUS Act implementation. The draft rule follows the law’s classification of permitted issuers as financial institutions under the Bank Secrecy Act, and would require issuers to collect identifying information such as names, addresses, dates of birth or formation, and identification numbers from direct customers. Issuers would also be expected to verify identities using documentary or non-documentary techniques and retain verification records for specified retention periods.

Under the agencies’ timeline, issuers would have 12 months after publication of a final rule to achieve compliance. The broader GENIUS Act licensing and reserve rules are slated to begin restricting unlicensed payment stablecoin issuance in the U.S. on January 18, 2027, which has raised industry concerns about the compressed implementation window.

Why the Blockchain Association wants a firm P2P boundary

The Blockchain Association supports identity checks at the primary market — that is, where an issuer issues, redeems, converts, repurchases, or provides custody for a payment stablecoin and maintains a direct customer relationship. But it argues the proposed rule must not reach transfers that occur without issuer intermediation, including transactions between self‑hosted wallets or trades on secondary-market platforms.

Regulators’ draft already recognizes a distinction: simply owning an issuer’s token or interacting with an issuer only through a smart contract would not automatically establish an "account" for KYC purposes. The agencies call such interactions secondary-market activity and list examples like self-custody transfers, purchases from intermediaries, exchange trades, and direct payments to merchants. The agencies also estimated that roughly 99% of stablecoin transaction volume occurs in these secondary markets and acknowledged that issuers generally cannot obtain identity data for token users who never deal with the issuer directly.

Key compliance details and industry concerns

Data collection, verification and recordkeeping

The proposed customer identification program requires permitted stablecoin issuers to collect basic identity fields and to form a reasonable belief about a customer’s identity through documentary or non-documentary verification. Records with identification details would remain on file for five years after an account closure, while verification records would be retained for five years after creation. These rules mirror bank-style KYC expectations and align stablecoin issuers with other regulated financial institutions for AML oversight.

Digital identity, verifiable credentials and flexibility

The Blockchain Association asked regulators to preserve flexibility in how issuers verify identities, explicitly supporting digital identity solutions and interoperable verifiable credentials. The draft rule allows documentary and non-documentary verification but seeks public comment on whether the final rule should explicitly reference digital identities and related technologies. Industry stakeholders say modern, cryptographically verifiable identity systems can reduce friction, improve privacy, and lower duplicate verification burdens across regulated firms.

Avoiding duplicate checks and carving out reliance rules

Issuers often transact with banks, exchanges and other regulated intermediaries that already conduct KYC. The proposed rule permits an issuer to rely on certain verification work performed by another federally regulated financial institution, provided the reliance is reasonable, contractual, and supported by annual certification. The Blockchain Association wants clearer guidance on reliance arrangements across affiliates, intermediaries and state‑regulated entities to prevent redundant compliance and excessive operational cost.

Next steps and why the definition of "account" matters

The public comment window closed on Aug. 21. Regulators will now evaluate submissions and may refine definitions of "account," "customer," and "digital asset service provider" before releasing a final rule. How agencies finalize the scope of the ID requirements — particularly whether they draw a hard line excluding purely P2P secondary-market transfers — will determine the operational burden for issuers and the wider crypto ecosystem.

If the rule stands as proposed, permitted stablecoin issuers would need to implement KYC programs and verification workflows, but would not be expected to obtain identities for downstream token holders who never interact with the issuer. That distinction matters for wallets, decentralized exchange (DEX) activity, merchant payments, and on‑chain P2P transactions.

Implications for AML, licensing and industry readiness

The final customer identification requirements will operate alongside separate GENIUS Act rulemakings covering issuer licensing, reserve standards, AML programs, sanctions compliance and lawful access. Collectively, these rules will reshape the regulatory landscape for payment stablecoins in the U.S. Industry groups and market participants are watching how regulators balance financial-security objectives with the technical realities of decentralized token flows and privacy-preserving digital identity.

For issuers, rules that focus KYC on primary-market customers while allowing secondary-market transfers to remain outside issuer obligations would reduce friction and limit the need for identity capture across the broader token economy. Conversely, a broader interpretation that reaches P2P transfers would impose new compliance requirements on activities that currently function without issuer involvement, affecting wallets, DEXs, custodians and merchants.

The final GENIUS Act rules remain pending. Market participants should monitor agency guidance and prepare to integrate identity, AML, and third-party reliance arrangements into issuer operations if the rule is published as proposed.