The American Bankers Association (ABA) and the Blockchain Association have submitted contrasting views to US regulators regarding customer identification programs (CIPs) for payment stablecoin issuers. The debate centers on whether individuals cashing out stablecoins directly with an issuer must first open an account and complete identity checks.
Under a joint federal proposal introduced in June, permitted payment stablecoin issuers would be required to operate a CIP for customers who open accounts. However, the proposal left the exact boundary for direct redemptions unresolved, asking whether a direct redemption by a holder without a prior issuer relationship constitutes opening an account.
Competing Industry Positions
The ABA argued in an August letter that anyone buying or redeeming a payment stablecoin directly with an issuer should be required to open an account and undergo the issuer's CIP process before receiving funds. The banking lobby stated this approach would prevent one-off direct redemptions by unidentified non-customers and urged that secondary-market service providers face comparable customer-identification regulations.
Conversely, the Blockchain Association supports identity checks for direct primary-market account customers but advocates for preserving an issuer's option to handle a one-off redemption for a non-account holder. The association also contends that when a regulated intermediary routes a redemption, that intermediary should be considered the issuer's customer, rather than turning every underlying downstream user into an issuer customer.
Current Industry Practices
Existing stablecoin issuers already utilize account-based restrictions for eligible US customers. Circle and Paxos currently require users to complete account verification processes, such as through a Circle Mint account, in order to access direct redemptions. In contrast, Circle's policy under Europe's MiCA framework allows eligible retail holders in the European Economic Area to use a dedicated form while still complying with identity checks and screening requirements.
Federal regulators are reviewing comments from R-1885 responses, including inputs from the ABA and the Blockchain Association, to determine the final rules for stablecoin issuer customer identification.
