Banks Tell FDIC Stablecoin Issuers Should Police Wallets, Not Community Banks

Banks backing the FDIC’s stablecoin proposal are on board with regulated issuance, but they are drawing a hard line on who actually has to watch transactions. The practical fight is over visibility, sanctions screening and whether compliance responsibility sits with the issuer or gets pushed down the payments chain.

1. During the comment period that closed Tuesday (Aug. 4), banks broadly supported regulated stablecoin issuance, but their letters flagged unresolved questions around transaction visibility, redemption, third-party oversight and how compliance duties should be split across the payments ecosystem.
2. The FDIC’s proposal focuses on Bank Secrecy Act and sanctions compliance standards for permitted payment stablecoin issuers (PPSIs) it supervises. It would bring Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) requirements into the FDIC’s supervisory and enforcement framework for stablecoin issuers affiliated with state nonmember banks and state savings associations, and would require the FDIC to notify FinCEN at least 30 days before certain supervisory or enforcement actions.
3. The Independent Community Bankers of America (ICBA) drew a line between a stablecoin issuer and a bank providing ordinary services. A community bank holding reserve or operating accounts should monitor its customers, accounts and transactions, the group said. It should not “be expected to police secondary-market transfers, wallet-level activity or product-specific risks” outside its control. ICBA said blockchain analytics, wallet screening and stablecoin-specific transaction monitoring should stay with the issuer.
4. ICBA also warned that compliance responsibility does not disappear just because an issuer outsources part of the process. A FinTech wallet, exchange or payment intermediary may hold customer and transaction data that the issuer does not, but the issuer can still remain on the hook for controls carried out by that intermediary. The group therefore recommended ongoing due diligence on third parties and said outsourcing identity checks, screening or monitoring should not relieve the issuer of accountability.
5. International Bancshares Corp. said strong anti-money laundering and sanctions standards are necessary, but that the proposal addresses only one slice of stablecoin risk. In its letter, it pointed to fraud, consumer harm, sanctions evasion, deposit displacement and broader instability as issues that cannot be solved just by applying existing compliance rules to a new product.
6. On sanctions, the bank comment letters get more specific than most policy papers do. ICBA said issuers should be able to identify, block, freeze or reject prohibited activity and should account for mixers, wallet obfuscation, chain-hopping, sanctioned jurisdictions and transfers that move at payment speed rather than bank-compliance speed.

The thing high-risk PSPs should notice here is not the policy language, but the liability map. If the issuer is expected to own wallet-level monitoring while intermediaries hold the useful data, then the contract stack, data-sharing rights and escalation process matter as much as the compliance memo.