What Do Regulators Expect Today for Stablecoin Payments Screening, and What’s Next?
- Chris Ostrowski
- May 1
- 4 min read
As stablecoins rapidly become a mainstream payment rail, clarity around AML and sanction screening regulations are gaining more clarity.
Across the US, UK, EU, and key global markets, regulators are moving from fragmented guidance to defined expectations. And the message is consistent:
A stablecoin payment is still a payment. It doesn’t matter whether it moves over SWIFT, RTP, or a blockchain.
That means sanctions obligations, AML controls, and reporting requirements don’t disappear with stablecoins. If anything, they are becoming more explicit and more enforceable.
The Global Direction: Different Frameworks, Same Core Principle
While regional approaches differ, they largely align with guidance from the FATF, emphasizing the application of risk-based AML controls consistently across all payment types.
Here’s how that plays out across major jurisdictions:
United States: Formalizing Stablecoins as Financial Infrastructure
In the US, stablecoin payments are no longer treated as adjacent to financial systems; they are part of them.
The GENIUS Act of July 2025 marked that turning point. Stablecoin issuers are now explicitly treated as financial institutions under US law.
That brings them squarely under Bank Secrecy Act (BSA) obligations, requiring a full AML program, sanctions screening at transaction origination, and mandatory reporting of OFAC hits within 10 days.
In parallel, FinCEN has begun formalizing these expectations through proposed rules that promise to turn legislative direction into enforceable compliance standards.
European Union: Layered Regulation Driving Transaction-Level Controls
The EU approach is more complex, yet more prescriptive at the transaction level. The EU currently relies on a layered framework rather than a single rule comprised of:
While MiCA itself doesn’t explicitly mandate wallet-level sanctions screening, AMLD5 and TFR effectively close that gap by requiring screening at the point of transaction, identifying both originators and beneficiaries, and aligning with sanctions and AML controls already applied to fiat payments.
United Kingdom: New Guidance, But the Same Expectations for Screening
With the publication of Money Laundering and Terrorist Financing (Amendment) Regulations in April 2026, stablecoins are explicitly within AML expectations. While stablecoins used for payments are not yet regulated under the Payments Services Regulations (PSRs), HM Treasury has made clear that AML/CTF obligations fully apply where stablecoin activity is carried out by regulated crypto asset firms or other obliged entities.
Regarding travel rule compliance, UK AML rules continue to reinforce that their policy aligns under the FATF travel rule.
GCC and UAE: Treating Stablecoins as Regulated Payment Instruments
In the Gulf region, regulators have moved quickly to integrate stablecoins into existing AML frameworks, falling under the same scrutiny as fiat payments across most of the GCC. One notable exception is Saudi Arabia, where Saudi Central Bank (SAMA) has not yet formally recognized stablecoins as a valid payment form.
Authorities such as Virtual Assets Regulatory Authority (VARA) treat stablecoins as virtual assets that may be used as payments, which requires full AML and sanctions compliance, transaction monitoring aligned with traditional payments, and oversight of virtual asset service providers (VASPs).
What Regulators Expect Today: Parity with Traditional Payments
Regulatory expectations for stablecoins are becoming clearer by the day. Across jurisdictions, and aligned with principles from the FATF, institutions are expected to treat stablecoin transactions with the same rigor as traditional payments.
That means screening at origination, not after the fact, along with continuous monitoring of exposure to sanctioned entities and illicit activity. Requirements tied to transparency, particularly those influenced by Travel Rule principles, are pushing firms to connect blockchain transactions with real-world identities. At the same time, regulators expect risk-based frameworks that incorporate blockchain analytics alongside traditional AML controls.
Although these aren’t emerging ideas, they do reflect how regulators and examiners are already assessing compliance programs today.
What’s Coming Next: Stablecoin-Specific Rules
The next phase of regulation will be more explicit and more demanding. Stablecoin-specific rules are taking shape, particularly for issuers and intermediaries, while regulators increase their focus on risks that move across blockchains and asset types.
Examples of this include MiCA Phase 2, which will enhance supervision for stablecoins. The UK is working on the unified payments regime for stablecoins, which will formalize rules and requirements for stablecoins issued in the UK. Finally, VARA is working on stablecoin-specific prudential and usage controls that will have tighter reserve transparency and expanded transaction-monitoring expectations tied to the payment flows, like traditional payments do today.
At the same time, compliance expectations are becoming more challenging. Broad or opaque approaches won’t hold up under scrutiny. Programs must be defensible with clear risk models, evidence-based alerting, and explainable decision-making.
Underlying all of this is a push towards greater global alignment to reduce the inconsistencies that bad actors have historically exploited. The bottom line is that regulators want consistency, transparency, and proof to go along with a payment rail designed to cross borders and settle globally in seconds with minimal friction.
The Real Challenge: Technology, Not Policy
For most institutions, the issue isn’t understanding the rules, it’s executing them.
Many AML programs were built for batch-based, legacy systems but not real-time, multi-rail environments. As a result, firms often end up with separate controls for crypto and fiat which can create blind spots and inefficiencies.
At the same time, forcing real-time payments through legacy processes can cause latency, undermining the speed stablecoins are designed to deliver.
The Path Forward: Rethinking AML for a Multi-Rail World
Addressing the gap between traditional and stablecoin payments requires a unified approach. Leading institutions are moving towards architectures that apply consistent screening and risk controls across all payment types, creating a single view of risk.
This shift demands real-time, context-aware decisioning, where transactions are evaluated using a combination of counterparty data, transaction details, and behavioral signals. It also requires integrating on-chain analytics with off-chain identity data to fully understand risk.
Done well, this approach supports both compliance and scale, ensuring stablecoins enhance financial crime controls rather than weaken them.
