US stablecoin rules raise costs and favor larger issuers

US stablecoin regulation is moving from legal approval to full-time supervision, a shift that could strengthen large issuers and make market entry harder for smaller rivals.

Three federal proposals would push permitted payment stablecoin issuers closer to bank-style oversight. Treasury's FinCEN and OFAC proposed treating them as financial institutions under the Bank Secrecy Act, with anti-money-laundering controls, sanctions screening, transaction monitoring, and suspicious activity reporting. The FDIC proposed similar obligations for issuers it supervises.

The OCC added another layer in June with draft reporting forms. Issuers under its jurisdiction would submit weekly confidential data on issuance, redemptions, trading volume, and reserve assets, plus quarterly financial reports. Issuers with more than $50 billion outstanding would also need audited annual financial statements, and all would face at least one examination every 12 months.

That framework formalizes practices larger issuers already have, but it raises operating costs across the board. Compliance teams, reporting systems, legal support, and banking relationships become part of the business model. The GENIUS Act also bars permitted issuers from paying interest or yield on tokens, limiting one way to attract users. As a result, competition may shift toward liquidity, integrations, and institutional access, leaving scale as a bigger advantage for firms such as Circle and Tether.