Stablecoin KYC Rules Should Not Cover P2P Transfers, Blockchain Association Warns - Bitcoin Foundation

The Blockchain Association has issued a warning regarding proposed stablecoin regulations, arguing that Know Your Customer (KYC) requirements should not extend to peer-to-peer (P2P) transfers. The advocacy group contends that such rules, while aimed at curbing illicit finance, would inadvertently capture routine, non-custodial transactions that occur directly between two individuals without an intermediary.

The distinction is significant for market structure. Applying KYC checks to P2P transfers would create a compliance burden on software developers and wallet providers who do not actually control user funds. That could push users toward unregulated, offshore platforms, undermining the transparency that regulators seek. The Blockchain Association frames this as a matter of proportionality—treating self-custody and personal transfers more like cash, while focusing formal compliance on centralized exchanges and custodial services.

For observers, the key is whether regulators adopt a narrow or broad definition of "intermediary" in final stablecoin legislation. The outcome will influence how decentralized financial tools can operate within the U.S. legal framework, as well as the competitive position of domestic stablecoin issuers versus foreign alternatives. The debate highlights a broader tension: applying traditional banking rules to open-source software without breaking the utility of P2P payments.