Fed Wants Stablecoin Companies to Verify Customer IDs

Imagine if you could open a bank account without showing any ID. That's basically how parts of the crypto world have worked — and the U.S. government wants to change it.

On Thursday, the Federal Reserve (the central bank of the United States that oversees the country's money and banking system) proposed new rules for companies that issue stablecoins (digital coins designed to always be worth $1, used like cash in the crypto world).

What the new rule requires: Before opening an account, stablecoin issuers would need to collect from each customer:

• Legal name
• Date of birth (or business formation date)
• Physical address
• A government-issued ID number

This is the same kind of identity check that banks and brokers have used for over 20 years. The goal is to stop money laundering (hiding the source of illegal money) and prevent criminals from moving funds secretly.

Why this is happening now: This follows the Genius Act, a law signed by President Trump in July 2025 that created the first official U.S. rulebook for stablecoins. The law requires:

• 100% reserve backing — meaning for every coin issued, the company must hold $1 in safe, easy-to-sell assets
• Strict anti-money-laundering checks
• Customer identity programs

The catch: The law could take effect as early as January 18, 2027, but the detailed ID rules likely won't be finalized until 2027. That means the law might kick in before all the rules are fully ready.

Not everyone is relaxed. Fed Governor Michael Barr warned that stablecoins still carry real risks and that bad actors find it "far too easy" to dodge restrictions when using digital assets.

One smart detail: the rules apply when someone directly redeems a stablecoin for cash with the issuer — but simple coin transfers between people on exchanges wouldn't trigger the ID requirement.

Bottom line: Washington is working to make stablecoins play by the same rules as traditional banks. For everyday users, this means more identity checks but also a safer, more trustworthy crypto system. The public has 60 days to comment on the proposal.

This is an AI-generated summary. Read the original article at: https://bitcoinmagazine.com/news/federal-reserve-moves-to-close-stablecoin