Stablecoin compliance: issuers and banks must implement AML/CFT and ecosystem monitoring

Regulatory frameworks for stablecoins are now established in major jurisdictions (US, EU, Hong Kong), placing clear operational requirements on issuers and the financial institutions that serve them. Key obligations for stablecoin issuers include licensing/registration, full reserve backing held at licensed banks, transparent reserve disclosure, redemption at par, and compliance with AML/CFT and sanctions rules. Regulators and the FATF expect issuers to perform KYC, conduct VASP due diligence, comply with the Travel Rule, and carry out ongoing risk-based monitoring of on-chain transactions. Guidance distinguishes two monitoring duties: direct customer transaction monitoring and broader ecosystem monitoring to detect misuse across token networks. Banks providing services (operating accounts, reserve custody, settlement) must apply due diligence frameworks that evaluate issuer licensing, governance, financial crime controls, blockchain monitoring capabilities and customer risk profiles. Wolfsberg Group guidance (Sept 2025) advises banks to leverage existing correspondent-banking risk practices and use on-chain data to validate issuer behaviour. The article argues regulatory clarity creates market opportunity: issuers that build robust compliance frameworks can become core infrastructure, and banks that onboard them early can capture growth. Practical compliance can reuse established financial crime controls supplemented by blockchain monitoring tools. Elliptic offers a detailed report, “How to safely issue and bank stablecoins,” with implementation guidance and typologies.