Banks Push Back on FDIC: Stablecoin Wallet Screening Should Fall to Issuers

The Federal Deposit Insurance Corporation's (FDIC) proposed anti-money laundering (AML) and sanctions compliance rules for payment stablecoin issuers (PPSIs) under its supervision have drawn a collective pushback from the banking industry during the comment period: wallet screening and secondary-market transaction monitoring should be explicitly assigned to issuers, not to banks providing reserve accounts.

At the core of the FDIC's proposal is the incorporation of Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) requirements into its supervisory framework for stablecoin issuers affiliated with state non-member banks and state savings associations. The plan also requires the FDIC to notify FinCEN at least 30 days before taking certain supervisory or enforcement actions. This arrangement aims to fill the compliance gap for stablecoin issuance within the federal banking regulatory system, but banks responding to the proposal broadly worry that unclear division of responsibilities will lead to regulatory overlap.

The Independent Community Bankers of America (ICBA) drew a sharp line in its comment letter: community banks that hold reserve or operating accounts for stablecoin issuers should monitor their own customers, accounts, and transactions, but should not be expected to "police secondary-market transfers, wallet-level activity, or product-specific risks beyond their control." Blockchain analytics, wallet screening, and stablecoin-specific transaction monitoring should fall to issuers.

Behind this stance lies a practical operational dilemma. Stablecoins move on-chain in seconds, and cross-jurisdictional transfers are nearly instantaneous, while banks have limited visibility into on-chain activity. If reserve account banks were held responsible for the behavior of token holders beyond the issuer's customers, they would face a paradox: no access to data, yet full compliance liability. The ICBA's response is essentially a demand that regulators respect the principle of "parity between control and visibility."

The redemption process emerges as the focal point of compliance testing. When a token holder redeems fiat currency from an issuer, the issuer may need to identify holders it has never served. This means issuers must build dynamic Know-Your-Agent (KYA) capabilities—not just verifying initial customer identities, but also reassessing the sanctions status and transaction history of wallet addresses at every redemption. For redemption flows executed automatically via smart contracts, this requirement would force issuers to embed real-time screening logic at the code level, rather than relying on after-the-fact manual review.

Banks' warnings about regulatory overlap are not unfounded. If the responsibilities of the FDIC, FinCEN, and OFAC are not clearly delineated, issuers could face multiple, potentially conflicting directives in their compliance decisions. For example, if OFAC's sanctions list updates and the FDIC's regulatory requirements fall out of sync, an issuer could violate one agency's rules by following another's. This uncertainty is amplified in cross-border stablecoin settlement scenarios—a single transaction could involve a U.S. issuer, non-U.S. token holders, and clearing paths across multiple jurisdictions.

From the perspective of agent payment compliance that OceanAlt focuses on, this dispute has direct relevance. As AI agents are authorized to execute payments, stablecoins become the primary settlement medium for machine-to-machine (M2M) transactions. If wallet screening responsibility ultimately rests with issuers, they will need to provide real-time pre-settlement screening for every agent-initiated transaction—including verifying agent identity (KYA), checking recipient whitelists, and enforcing per-transaction limits and daily cumulative caps. If the FDIC's rule clarifies that issuers bear all on-chain monitoring obligations, it would indirectly push issuers toward more automated compliance infrastructure, rather than relying on manual sampling.

For payment service providers (PSPs) and fintech companies, the direction of this rule will determine their compliance cost structure. If banks are exempted from secondary-market monitoring duties, PSPs dealing directly with issuers would need to shoulder heavier screening responsibilities themselves, potentially driving smaller issuers to specialized compliance service providers or to partner with banks that have mature blockchain analytics capabilities. Conversely, if regulators ultimately require banks to take on some monitoring duties, banks would have to invest in on-chain data tools, which could raise compliance barriers for smaller institutions.

For now, the FDIC has not announced a timeline for the final rule. But the collective feedback from the banking industry has sent a clear signal: the division of stablecoin compliance responsibilities must align with data visibility, or regulatory requirements will devolve into paper compliance. For the global stablecoin ecosystem, the final shape of the U.S. regulatory framework will have a demonstration effect—other jurisdictions may follow the FDIC's approach, specifying AML and sanctions obligations at the issuer level. This means that, regardless of how the rule lands, issuers will become the central node in the compliance chain, and wallet-level screening will shift from an option to a prerequisite for market access.

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Source: PYMNTS · https://www.pymnts.com/cryptocurrency/2026/banks-ask-fdic-make-issuers-police-stablecoin-wallets/