FinCEN: Stablecoin Issuers Are Money Transmitters, No Matter What - CoinDesk

The U.S. Financial Crimes Enforcement Network (FinCEN) views all stablecoins as falling under their remit to protect “money transmission services, Director Kenneth Blanco said.

Speaking at Chainalysis Links conference in New York City on Friday, Blanco said FinCEN upholds its “technology neutral” standpoint in including stablecoins under that definition.

“It does not matter if the stablecoin is backed by a currency, a commodity, or even an algorithm – the rules are the same,” Blanco said.

The clarification by America’s anti-money laundering regulator came as Blanco insisted stablecoin administrators must register as a Money Services Business (MSB) with FinCEN.

A branch of the Treasury Department, FinCEN investigates money laundering and other financial crimes by pouring through transaction records and data.

Including stablecoins as money transmitters, and their administrators as MSBs, means firms dealing with them must follow federal know-your-customer (KYC) and AML laws under the Bank Secrecy Act.

Stablecoins are issued based on reserve assets - frequently, 1:1 with the U.S. dollar or linked to a basket of currencies. But they can also use other mechanisms to ensure stability. Dai, the MakerDAO token, uses algorithms to rebalance.

Bitcoin, on the other hand, trades freely.

It is a distinction without a difference, according to Blanco.

“Just because you say you are a banana doesn’t make you a banana,” he said.