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U.S. central banker warns that stablecoins need stronger AML controls and technological safeguards under new GENIUS Act rulemaking to prevent illicit finance.
Stablecoin regulation and anti-money laundering compliance have to be stepped up in the implementation of the GENIUS Act, according to a statement by Federal Reserve Governor Michael Barr. His remarks were made in a financial policy event in Washington D.C. His main concern was the illicit finance risks associated with the growth in the digital assets market. He urged regulators to ensure adequate anti-money laundering controls to allow the full potential of the stablecoins to be achieved without the potential for money laundering and terrorist financing.
Stablecoins offer several benefits to the public, including speed and accessibility, which are particularly valuable to those with a phone and internet connection. However, the accessibility to the secondary markets without proper identification poses a money laundering concern. He stressed the importance of regulatory and technological responses to the risks.
“A key area of concern is the potential for the use of stablecoins in money laundering or terrorist financing schemes,” said Barr, while emphasizing the importance of stronger AML measures in the implementation of the framework established by the GENIUS Act. Such measures would also enable the issuance of stablecoins to align with the financial system.
Business Honor views the remarks by the U.S. Treasury and other authorities on the implementation of the rule on the compliance of stablecoins as coming in the wake of the issuance of a proposal on the implementation of the GENIUS Act.
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