Banking trade groups want stablecoin compliance to land on the parts of the market that create the most risk, not just the issuance layer.
In a filing cited by Decrypt, the industry’s trade organizations argue that anti-money laundering rules should focus on higher-risk activity. Their complaint is narrower and more practical than a full rewrite of stablecoin policy. They say regulators also need to address gaps tied to stablecoin secondary markets.
That matters because stablecoins do not just move during issuance. They move after issuance too, when holders trade them, transfer them between venues, or use them as rails for other transactions. If rules treat all activity as the same level of concern, the compliance burden can land where regulators see less immediate abuse, while under-covering the pathways where criminals can blend with legitimate flows.
What the banks are asking regulators to fix
Decrypt reports that banking industry trade groups argue AML rules should do two things at once.
First, they should focus on higher-risk activity. The argument is essentially risk-based enforcement, with rules calibrated to where misuse is more likely.
Second, the rules should address gaps in stablecoin secondary markets. The underlying point is that compliance coverage cannot stop at primary issuance or custody. If secondary trading is where the frictionless movement happens, that’s where blind spots can emerge.
The article frames this as a policy boundary issue. Trade groups want stablecoin regulation to reflect how stablecoins actually circulate in markets.
Why secondary markets change the risk math
Secondary markets are where assets often gain liquidity and where price discovery and venue-to-venue movement take place. That can increase legitimate use. It can also increase the number of touchpoints that could be exploited to conceal funding sources or destination chains.
Decrypt’s summary of the trade groups’ position highlights the compliance implication: regulators should not treat secondary market activity as an afterthought.
If rules fail to account for secondary-market dynamics, the result can be uneven oversight. One part of the pipeline gets tight scrutiny. Another part keeps operating with looser coverage because it sits outside the original design of the compliance framework.
What to watch next
For readers tracking stablecoin rules, the key signal in Decrypt’s reporting is the industry’s insistence on scope. The trade groups are trying to influence how regulators draw the lines around AML obligations, especially for activity that occurs after issuance.
The headline takeaway is not a new compliance framework on its own. It’s a push to steer regulators toward a risk-based approach that explicitly includes secondary markets, where the market surface area is larger and where gaps can be hardest to spot after the fact.