AI, Blockchain, and the Race to Police the Future of Money

The U.S. Treasury has launched a 60-day public comment period as part of its implementation of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, a newly enacted law aiming to regulate stablecoins and bolster the U.S. financial technology sector. The request for comment, issued on August 18, 2025, invites stakeholders to provide feedback on innovative methods for detecting illicit financial activity in the digital asset space. The U.S. Treasury emphasized the importance of leveraging technologies such as artificial intelligence, digital identity verification, and blockchain monitoring tools to address emerging risks while ensuring they do not overburden financial institutions [1].

The GENIUS Act, signed into law by President Donald Trump in July 2025, is the first major U.S. legislation to establish a comprehensive regulatory framework for stablecoin issuers. It aligns with the administration’s broader Executive Order 14178, which seeks to strengthen American leadership in digital financial technology and mitigate national security threats from unregulated digital assets. The law mandates that stablecoins be backed by safe assets such as cash, U.S. Treasury securities, and short-term repurchase agreements, while also requiring monthly public disclosures of reserve holdings and compliance with anti-money laundering (AML) and sanctions enforcement requirements [2].

The Treasury’s call for public input is a critical step in shaping how the agency and other federal regulators, including the Office of the Comptroller of the Currency and the Federal Reserve, will operationalize the new law. Secretary Scott Bessent highlighted the strategic importance of this process, stating that the feedback will inform Treasury’s research on the effectiveness, costs, and risks associated with proposed tools to combat illicit activity. The agency plans to use the insights to submit reports to the Senate Banking Committee and the House Financial Services Committee, as required by the GENIUS Act [3].

Industry experts and financial institutions are already preparing to issue their own stablecoins under the new regulatory environment. Major banks such as Bank of America and Citigroup have announced intentions to launch dollar-backed tokens, while fintech companies like Fiserv are developing supporting infrastructure. However, the implementation of stablecoins involves complex decisions, including choosing the blockchain technology—public or private—and navigating compliance costs, especially for nonbanks, which must now adhere to stringent AML and “know your customer” (KYC) requirements [2].

The broader implications of the GENIUS Act extend beyond the U.S. financial landscape. The law is designed to ensure that the U.S. dollar remains the dominant currency in the global stablecoin market, which could have significant effects on international finance and monetary policy. In contrast to the European Union’s Markets in Crypto-Assets (MiCA) regulation, which provides a broader framework covering most crypto assets, the U.S. approach is more focused on payment stablecoins. While MiCA allows for passporting across EU member states and stricter oversight of asset-referenced tokens, the GENIUS Act emphasizes federal regulation with limited room for state-level oversight beyond certain thresholds [4].

Despite the promise of stablecoins for enabling faster and cheaper payments, especially for cross-border transactions, experts warn of potential risks. These include the displacement of traditional banking services and the possibility of increased financial instability if stablecoins are used to circumvent existing monetary systems. For example, allowing stablecoin holders to earn interest could create a competitive threat to banks and reduce the availability of credit to businesses and consumers [2].

The deadline for submitting comments to the Treasury is October 17, 2025. The agency has stressed the importance of this feedback in guiding its research and policy development, which will inform future regulatory actions and potential updates to the GENIUS Act. The law’s full implementation is expected to take several years, with the final rules likely to be shaped by ongoing discussions in Congress and the broader financial sector [1].

Source:

[1] Treasury Issues Request for Comment Related to the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act (https://home.treasury.gov/news/press-releases/sb0228)

[2] Companies plan stablecoins under new law, but experts say hurdles remain (https://www.reuters.com/legal/government/companies-plan-stablecoins-under-new-law-experts-say-hurdles-remain-2025-08-12/)

[3] US Treasury Department seeks public input to help tackle illicit crypto activities (https://www.mitrade.com/insights/news/live-news/article-3-1049437-20250819)

[4] MiCA vs. GENIUS Act: How Crypto Laws Differ in Europe and the US (https://www.ccn.com/education/crypto/mica-vs-genius-act-how-crypto-laws-differ-in-europe-and-the-us/)