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Treasury seeks public input on detection of illicit activity in digital assets
NFT Gaming

Treasury seeks public input on detection of illicit activity in digital assets

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The United States Department of the Treasury is seeking public feedback on innovative methods and tools for detecting illicit activity in the digital assets industry.

Summary

  • U.S. Treasury has asked for public comments on tools used to detect and monitor illicit activity in the digital assets ecosystem.
  • The public have until October 17, 2025 to share their input as required under the GENIUS Act.

The U.S. Treasury said in a press release that interested members of the public have an opportunity to provide comments on the techniques or strategies that regulated institutions use to detect and mitigate illicit finance risks in the crypto space. 

Focus areas of the public input will be on four key aspects of the ecosystem. These are: application programming interfaces, digital identity verification, artificial intelligence, and blockchain technology use and monitoring.

Why public input?

The notice fulfills a requirement under GENIUS Act, the landmark U.S. stablecoin law President Donald Trump signed into law in July 2025. According to the government agency, the public have 60 days from the date of publishing the request for comment notice in the Federal Register to give their input, with this deadline set for October 17, 2025.

Public feedback on this matter helps the administration’s quest for policy that supports responsible growth and use of cryptocurrencies. Treasury’s move aligns with Trump’s executive order on “Strengthening American Leadership in Digital Financial Technology,” signed on January 23, 2025.

“Today’s request for comment fulfills Treasury’s obligation pursuant to section 9(a) of the GENIUS Act, which creates a comprehensive regulatory framework for stablecoin issuers in the United States. The GENIUS Act and E.O. 14178 together promote U.S. leadership in digital assets and bolster U.S. national security,” the U.S. Treasury noted.

The GENIUS Act requires the Treasury to use feedback from the public input to inform its research on aspects such as effectiveness of tools, costs involved, privacy features, and the cybersecurity risks of the tools.

In the cryptocurrency and blockchain security and analytics ecosystem, platforms such as Chainalysis and TRM Labs have become critical components with tools to detect and alert on potential threats and risks.



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Jesse Hamilton
NFT Gaming

U.S. Treasury Starts Work on Stablecoin Law, Gathering Views on Illicit Activity

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The U.S. Treasury Department is seeking new ideas for detecting and cutting off illicit crypto activity as it begins to put the new stablecoin law into effect.

The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act — the first major U.S. law to erect a regulatory system in the crypto space — called for government action on limiting dangers from bad actors in digital assets, and the Treasury Department is asking for public comments “to identify innovative or novel methods, techniques, or strategies that regulated financial institutions use, or have the potential to use, to detect illicit activity, such as money laundering, involving digital assets.”

The crypto sector will have a 60-day comment window to share industry views on clamping down on shady crypto use, according to the department’s request on Monday.

The GENIUS Act is now entering into what is typically a protracted period of implementation when a new financial-regulation law enters the arena of the federal agencies that need to put it into effect. The U.S. banking regulations, such as the Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. will also have policies to work out in the future oversight of stablecoin issuers.

But GENIUS was only the first and less significant piece of the two-part legislative priority for the crypto industry. The sector still awaits further action from Congress on the bill that would set up guardrails for the wider digital assets markets. The House of Representatives was in the lead in recently passing its Digital Asset Market Clarity Act with a wide bipartisan vote, but when the Senate returns from its summer break, it’ll take the reins in shaping that legislation under a slightly different approach than the House.

President Donald Trump has pushed his administration into rapidly crafting crypto-friendly policies, issuing multiple executive orders and statements driving federal regulators to set standards after years of resistance and legal challenges from the U.S. government. Agency heads such as Securities and Exchange Commission Chairman Paul Atkins have suggested that they can get some of the work done even before Congress finishes its crypto tasks.

Read More: Trump Signs GENIUS Act Into Law, Elevating First Major Crypto Effort to Become Policy



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US Treasury Considers Digital ID in DeFi to Curb Illicit Finance
Crypto Trends

US Treasury Considers Digital ID in DeFi to Curb Illicit Finance

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The US Department of the Treasury is seeking public feedback on how digital identity tools and other emerging technologies could be used to fight illicit finance in crypto markets, with one option being embedding identity checks into decentralized finance (DeFi) smart contracts.

The consultation, published this week, stems from the newly enacted Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), signed into law in July.

The Act, which sets out a regulatory framework for payment stablecoin issuers, directs the Treasury to explore new compliance technologies, including application programming interfaces (APIs), artificial intelligence, digital identity verification and blockchain monitoring.

One of the ideas in the request for comment is the potential for DeFi protocols to integrate digital identity credentials directly into their code. Under this model, a smart contract could automatically verify a user’s credential before executing a transaction, effectively building Know Your Customer (KYC) and Anti-Money Laundering (AML) safeguards into blockchain infrastructure.

Treasury considers digital ID verification in DeFi. Source: Laz

Related: GENIUS Act to spark wave of ‘killer apps’ and new payment services: Sygnum

Treasury: digital IDs could cut compliance costs

According to Treasury, digital identity solutions, which may include government IDs, biometrics or portable credentials, could reduce compliance costs while strengthening privacy protections.

They could also make it easier for financial institutions and DeFi services to detect money laundering, terrorist financing, or sanctions evasion before transactions occur.

Treasury also acknowledged potential challenges, including data privacy concerns and the need to balance innovation with regulatory oversight. “Treasury welcomes input on any matter that commenters believe is relevant to Treasury’s efforts,” the agency wrote.

Public comments are open until Oct. 17, 2025. Following the consultation, Treasury will submit a report to Congress and may issue guidance or propose new rules based on the findings.

Related: GENIUS Act yield ban may push trillions into tokenized assets — ex-bank exec

US banks warn against stablecoin yield loophole

Last week, several major US banking groups, led by the Bank Policy Institute (BPI), urged Congress to tighten rules under the GENIUS Act, warning that a loophole could let stablecoin issuers bypass restrictions on paying interest.

In a letter sent Tuesday, BPI said the gap could allow issuers to partner with exchanges or affiliates to offer yields, undermining the intent of the law. The group cautioned that unchecked growth of yield-bearing stablecoins could trigger up to $6.6 trillion in deposit outflows from traditional banks, threatening credit access for businesses.

Magazine: Bitcoin vs stablecoins showdown looms as GENIUS Act nears



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Decrypt logo
Crypto Trends

AUSTRAC Tightens Grip on Crypto ATMs After Spike in Illicit Activity

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In brief

  • AUSTRAC revoked a crypto ATM provider’s license and imposed $5,000 transaction caps after finding widespread fraud, especially targeting users aged 60–70.
  • New data shows over-50s account for 72% of ATM transaction value, prompting tighter rules and educational campaigns near machines.
  • The regulator said it will continue monitoring the sector and may introduce further measures if scam-related harm persists.

Elderly Australians are being scammed out of millions at crypto ATMs, and AUSTRAC is shutting them down.

AUSTRAC, or the Australian Transaction Reports and Analysis Centre, said it has refused to renew the registration of crypto ATM operator Harro’s Empires and imposed new conditions on others, according to a statement released Monday. 

To combat fraud, AUSTRAC has capped deposits and withdrawals at $5,000 per transaction and is requiring enhanced customer due diligence. Digital currency exchanges that accept cash have been urged to adopt similar safeguards.

“A large number of 60–70-year-old users are victims of scam activity, AUSTRAC CEO Brendan Thomas said in the statement. “It’s a huge concern.” 

The announcement follows a March warning by AUSTRAC that placed the sector “on notice,“ after a crypto taskforce formed in late 2023 flagged serious gaps in compliance. 

New data from nine crypto ATM providers show that people over 50 account for nearly 72% of total transaction value, with the 60–70 demographic alone representing 29%.

“AUSTRAC’s recent move, coupled with Singapore’s MAS’ licensing deadline, are particularly alarming given APAC’s established position as a crypto hub,” Altan Tutar, CEO and Co-Founder of MoreMarkets, told Decrypt. “The region has long attracted Web3 projects through balanced regulation that pushed innovation while maintaining oversight. This competitive advantage now appears at risk.”

AUSTRAC’s latest action targets a sector that has seen unchecked growth, with the number of crypto ATMs increasing from 23 in 2019 to over 1,800 today, according to Coin ATM Radar data.



Officials estimate that roughly $275 million is transferred annually via these machines, with nearly all transactions involving cash-based crypto purchases, primarily Bitcoin (BTC), Ethereum (ETH), and Tether (USDT).

“Operators must respect the law of the land,” Sudhakar Lakshmanaraja, founder of the blockchain education platform Digital South Trust, told Decrypt. “Compliance not only protects citizens but also reduces exposure to high-risk activities.

The regulator is also working with law enforcement to place educational materials near machines, hoping to deter victims before funds are sent. 

“However, I would warn anybody who is asked to use one of these machines to send funds to someone to stop and think twice, as once your money is gone, it is almost impossible for authorities to retrieve it,” Thomas warned.

Lakshmanaraja said AUSTRAC’s move was “a clear warning” to the industry, as regulators worldwide are accelerating efforts to curb money laundering, terrorism financing, and other illicit crypto activity.

Crypto fraud surged to $9.3 billion in 2024, with Americans over 60 identified as the most frequent victims and reporting $107 million in losses from ATM scams, according to the FBI’s 2024 annual crime report.

In response to the rising threat, lawmakers across the Pacific are deploying their own countermeasures. 

In February, U.S. Senator Dick Durbin proposed capping crypto ATM transactions and requiring refunds for scam victims, while Arizona and Nebraska passed laws mandating fraud warnings and ID checks.

Edited by Sebastian Sinclair

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