Kevin Carter | Fintech Compliance

Fintech compliance lawyer who builds. Plain-English takes on stablecoins, payments, AML and sponsor banks. Ex-Mastercard regulatory, founding GC/CCO + UK MLRO.

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

GENIUS takes effect in 80 days, on January 18.

If your product issues, sells or holds dollar stablecoins in the US, here are five things to have ready before then.

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

@jessepollak @aeroxyz @Uniswap @aave @Morpho Adoption has been fast. Another test will be Nov 23, when OKXICE opens a US venue for tokenized stocks under the SEC's innovation exemption. It will be interesting to see if the onchain venues to keep their volume once that's live.

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

@brian_armstrong Fun idea! Some of those requests will probably ask for higher limits or fewer checks, so someone still has to decide which ones compliance sees before they ship. It will be interesting to see how Coinbase sort those.

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

@EleanorTerrett @ICE_Markets @okx Since 67 companies used the SEC exemption's 30-day window to opt out, ETFs seem to be carrying the launch. Have you heard whether ETF sponsors will welcome the extra distribution, or will they object, too?

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

@sytaylor I agree. United mentioned risks of shared logins and purchases that the customer didn't intend, which a common standard could fix. Kirby also said he doesn't want another middleman, and no standard fixes that. I wonder much of this is security, and how much is distribution

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

@Getnianow Makes sense. At cash-out, I would probably do the same. Do flagged users get another way to verify, or is it a hard stop?

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

@QiLikeCheetah True, and both already let merchants recognize a signed agent. Have you seen any indication as to whether that will shift fraud liability the way 3-D Secure does?

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

@WuBlockchain Moving the funds through THORChain and Chainflip makes them much harder to freeze. The hackers still need to cash out somewhere, though. Are exchanges and OTC desks actually watching for these addresses?

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

@CoinDesk @Visa @monad Another chain for Visa's settlement program. Monad's planned private settlement, with details shared only with auditors and regulators, raises a practical question. How much will the bank on the other side see for its own sanctions checks?

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

@marcb_xyz I agree that compliance will set the pace for banks. If a bank's Business Agent describes an account or quotes a rate, that answer could count as an ad under Reg DD, so someone has to review what it says. Who will sign off on an agent's answers?

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

@davistrazza Agreed, an agent that picks the safer payment method would be an upgrade. For mistakes, the platform probably has to step in, because the bank may see the purchase as authorized if the customer gave the agent access. Platforms should start adding that to their terms.

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

@unujwal Fair point. Visa's Trusted Agent Protocol does add a signal for browsing, but the agent has to sign its requests, so it runs into the same opt-in problem you raised. Do you think stores will end up treating unsigned agents like any other bot?

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

@lukaivicev Makes sense. Paying moves the money and the liability, so people want to make that call themselves. The risk is that approving an agent’s work becomes a rubber stamp. How do you actually keep that step meaningful?

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

@plumenetwork Congrats to the Plume team! Keeping the legal claim on DTC's books while the token sits in the investor's own wallet is a smart pairing. If a token ends up in the wrong wallet, which record decides who owns it, the chain or DTC?

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

@hedera Agreed that proving it is the hard part. For debit and bank payments, US rules can treat a purchase as authorized if the customer gave the agent access, even when the agent overspends. Should those spending limits sit with the wallet or with the agent?

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

@brale_xyz Nice addition, Brale. FedNow payments are final once they settle, and the stablecoin can move on-chain seconds later. If the funding turns out to be fraud, there is not much time to stop either one. What checks run before the mint?

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

@zerohedge Twenty-one banks first announced this dollar stablecoin in September, and now there’s a budget. The next big call is the license. Under GENIUS, will it be a bank subsidiary, an OCC-approved issuer or a state-approved one?

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

FinCEN's order: https://t.co/N7fJmNFUkZ

[Kevin Carter | Fintech Compliance @fintechlawyerkc]

Binance cut off MEXC a month before FinCEN's order takes effect.

The order bars US financial institutions from moving funds to or from MEXC, starting 30 days after its Nov 10 publication. Binance blocked sends to MEXC that day.

Would you block MEXC now, or wait until December?