Banking industry trade groups are calling for anti-money laundering rules on stablecoins that zero in on higher-risk transactions and secondary market activity. The groups say current regulatory gaps leave the door open for abuse in parts of the stablecoin ecosystem that haven’t gotten enough scrutiny.
Why secondary markets are in the crosshairs
The trade groups argue that stablecoin rules should cover secondary markets — the places where users buy, sell, or trade stablecoins after their initial issuance. They see those markets as a weak spot where illicit actors could move money without the same oversight applied to banks and primary issuers.
In their view, requiring secondary platforms to collect identity data, report suspicious activity, and screen for sanctioned entities would close a loophole. The groups stress that not all stablecoin transactions carry the same risk. A person swapping a few hundred dollars isn't the same as a large, anonymous exchange, they say.
Focusing on where the real danger lies
The argument from the banking side is straightforward: don't treat every stablecoin transfer like a high-risk wire. Instead, they want regulators to put resources into monitoring transactions that look suspicious — large volumes, known mixers, addresses linked to criminal groups. They say a blanket rule could stifle legitimate use while ignoring the actual threats.
Trade groups representing major banks have historically pushed for equal regulatory treatment between crypto and traditional finance. But here they're drawing a line. They want the rules to be smart, not just heavy.
The gap they see in current stablecoin regulation
Existing frameworks, they argue, focus too much on the stablecoin issuer — the company that mints and redeems the token. That leaves a void in the secondary trading ecosystem. A stablecoin might be fully compliant at the point of issue, but once it gets onto a decentralized exchange or a peer-to-peer platform, the AML safeguards can evaporate.
The groups contend that this gap is not just theoretical. They point to patterns of stablecoins being used as settlement assets in ransomware payments and on darknet markets. Without secondary-market oversight, they say, enforcement becomes nearly impossible after the first hop.
Regulators, including the Treasury Department and the Financial Crimes Enforcement Network (FinCEN), have signaled they're looking at stablecoin rulemaking. The banking trade groups are making their case early, hoping to shape whatever guidelines come down.
The next concrete step could be a proposed rule from FinCEN covering stablecoin transactions. No timeline has been set, but the pressure from the banking sector is likely to keep the issue on the front burner.
