US banks demand stricter crypto AML regime

TLDR

US banking groups are pushing Washington to impose bank?style anti?money?laundering rules on crypto, especially for stablecoins, framing it as a national security issue.

1. The Bank Policy Institute (BPI) urges an overhaul of US AML and sanctions rules for cryptocurrencies and stablecoins, arguing current gaps let criminals exploit the system.
2. Crypto industry leaders accept tougher enforcement but say banks are overstating cryptos illicit use, which studies put at roughly 11.2 percent of on?chain activity.
3. The fight will shape stablecoin and exchange rules, with upcoming legislation and Treasury rulemakings likely to decide how bank?like US?regulated crypto becomes.

Deep Dive

1. What Banks Are Demanding

A major US bank lobby, the Bank Policy Institute, released a report titled Time for a Reckoning on AML and Crypto that calls for a broad tightening of anti?money?laundering and sanctions rules for digital assets and stablecoins. It argues that crypto firms do not face the same legal obligations as banks and that this gap poses a national security risk, citing figures such as $154 billion in illicit addresses in 2025 and strong growth in crypto?linked human?trafficking flows based on Chainalysis data.

BPI wants Congress to pass market?structure legislation that would put all key crypto intermediaries and stablecoin issuers under a common baseline of AML and sanctions obligations, similar to banks, and points to the US Treasurys proposed rules for stablecoin issuers as the direction of travel.

2. How The Crypto Industry Is Pushing Back

Coinbase Chief Policy Officer Faryar Shirzad and other industry voices have publicly challenged the BPI narrative, arguing it cherry?picks gross illicit volumes without context. They point out that Chainalysis and TRM Labs estimate illicit activity at or below about 11.2 percent of total on?chain volume, and that this share has been relatively stable even as crypto has grown.

Shirzad also compares this with United Nations estimates that roughly 25 percent of global GDP is laundered through the traditional financial system, including banks, to argue that banks are hardly spotless. Industry critics say the real issue is designing rules that target bad actors without driving compliant activity offshore or smothering non?custodial and open?source software.

3. Why It Matters For Stablecoins And US Rules

BPIs push lands in the middle of a wider fight over the CLARITY Act and other digital?asset bills, where banks have lobbied hard against yield?bearing stablecoin products and some forms of stablecoin rewards. State and industry groups have countered that overly strict limits on stablecoin yields and bank?only models could push innovation and liquidity offshore.

The report also intersects with Treasurys proposals for stablecoin issuers to follow bank?like AML and sanctions controls, and with real?world actions such as OFAC and Tether jointly freezing hundreds of millions of dollars in USDT linked to sanctioned entities. For users, the likely outcome is more rigorous KYC, sanctions screening, and information sharing at major US exchanges and stablecoin issuers, and tighter scrutiny of privacy?enhancing tools and cross?border flows.

Conclusion

US banks are using AML and sanctions concerns to push regulators to impose bank?style obligations on crypto, especially stablecoins, while the industry argues the risk is being overstated and is manageable with targeted rules. The eventual compromise will shape how banked US crypto rails become, affecting everything from how stablecoin yields work to how easily capital can move across borders. Watching the next moves on the CLARITY Act and Treasurys stablecoin rules will be key to understanding where that balance lands.