Banking and Finance Law Daily Wrap Up, FINANCIAL TECHNOLOGY—Credit union group urges credit union carve-out in stablecoin identification rule, (Aug 27, 2026)

By Shashi Kant, BALLB, LLM

The Defense Credit Union Council is asking regulators to exclude credit unions expressly from stablecoin issuers’ customer identification requirements.

The Defense Credit Union Council urged the Financial Crimes Enforcement Network, the Office of the Comptroller of the Currency, the Fed, the Federal Deposit Insurance Corporation, and the National Credit Union Administration to expressly state that federally chartered and state-chartered credit unions fall within a proposed exclusion from customer identification obligations for permitted payment stablecoin issuers, in a comment letter filed Aug. 21, 2026, on a joint proposed rule implementing the Guiding and Establishing National Innovation for U.S. Stablecoins Act (see Banking and Finance Law Daily, June 18, 2026). DCUC said it generally supports the proposed rule but asked the agencies to preserve flexibility in several areas as they finalize it. Comments on the proposed rule were due Aug. 21, 2026.

Credit union exclusion. DCUC said the proposed rule would exclude from the definition of “customer,” among other persons, a financial institution regulated by a federal functional regulator or a bank regulated by a state bank regulator. The letter said this language may be read to encompass federally insured credit unions but asked the agencies to expressly clarify that the exclusion covers both federally chartered credit unions regulated by the NCUA and state-chartered credit unions regulated by state supervisory authorities. DCUC said credit unions already are subject to comprehensive BSA/AML, CIP, and customer due diligence requirements. The letter said requiring a permitted payment stablecoin issuer (PPSI) to perform duplicative identification procedures on a regulated credit union would add compliance burden while providing limited additional risk mitigation.

Risk-based CIP standards. DCUC supported the proposed rule’s approach of requiring a PPSI to maintain a written CIP appropriate to its size and business rather than a uniform standard. The letter said a PPSI’s CIP should be tailored to its size, complexity, products, services, customer base, and risk profile.

Enterprise-wide compliance. DCUC asked the agencies to confirm in the final rule that a PPSI may satisfy its CIP obligations through an appropriately structured enterprise-wide CIP. The letter said this approach would reduce compliance burden and unnecessary duplication while promoting consistent standards across affiliated entities.

Verification flexibility. DCUC supported the proposed rule’s risk-based procedures for verifying customer identity. The letter said the appropriate verification method may vary depending on the customer relationship, the products or services involved, the information available, and the risk presented, and said no single verification methodology is appropriate for every customer or circumstance. DCUC urged the agencies to avoid establishing overly prescriptive verification requirements that could become outdated as technology, fraud risks, and identity-verification practices evolve. The letter also recommended that the agencies retain the proposed “reasonable period of time” standard for completing identity verification rather than adopting a set numerical deadline, saying the appropriate period may vary depending on the verification method used and the information available.

Other industry comments. Other trade groups have also submitted comments on the proposed rule. The American Bankers Association urged the agencies to remove a proposed “formal relationship” limit on when customer identification obligations attach and asked the agencies to require digital exchanges to collect and retain customer identifying information (see Banking and Finance Law Daily, Aug. 24, 2026). The Blockchain Association said it supports the proposal’s core design but asked the agencies to allow issuers to use modern and interoperable verification methods. The Independent Community Bankers of America said the final rule should hold issuers to bank-equivalent customer identification, verification, and record-keeping standards (see Banking and Finance Law Daily, Aug. 25, 2026). The Bank Policy Institute and The Clearing House Association asked the agencies to clarify how customer identification requirements apply to secondary-market activity and to redemption transactions (see Banking and Finance Law Daily, Aug. 26, 2026).

Companies: The Defense Credit Union Council

RegulatoryActivity: BankingOperations BankSecrecyAct Blockchain DepositInsurance FederalReserveSystem FinancialIntermediaries FinTech PrudentialRegulation SecuritiesDerivatives