U.S. Treasury Consults Public on Tech Tools to Combat Digital Asset Crime

The U.S. Department of the Treasury has launched a public comment period under the GENIUS Act to evaluate the role of emerging technologies in combating illicit financial activity involving digital assets. The consultation period, which began on August 18, 2025, remains open until October 17, 2025, and seeks input from a wide range of stakeholders, including financial institutions, technology firms, and the general public [2]. This initiative is part of the broader regulatory strategy outlined in the historic legislation signed by President Donald Trump on July 18, 2025 [1].

The focus of the consultation is on four key technologies: artificial intelligence (AI), application programming interfaces (APIs), digital identity verification, and blockchain analytics. These tools are seen as essential for improving the detection of suspicious activity and enhancing compliance within the digital asset ecosystem. The Treasury is particularly interested in understanding how these technologies can be integrated into existing frameworks and what regulatory adjustments may be necessary to support their deployment [3].

A major objective of the consultation is to assess how AI and blockchain analytics can be used to detect and track complex criminal networks, such as those involved in drug trafficking, ransomware attacks, and terrorist financing. The department is also examining the potential of digital identity verification to strengthen compliance in decentralized finance (DeFi) platforms and smart contracts [5]. These efforts align with the broader goals of Executive Order 14178 and reflect a coordinated approach between the Treasury and the IRS to address digital asset-related crime [6].

The consultation evaluates each technology against seven criteria defined by the GENIUS Act, including detection capability, implementation costs, data sensitivity, privacy risks, cybersecurity threats, and overall effectiveness in preventing illicit financing [7]. The Treasury acknowledges that while these technologies offer significant potential, they also come with challenges, including the need for institutional expertise, cybersecurity risks, and the costs associated with integration [8].

By seeking public input, the Treasury aims to identify regulatory barriers that may hinder the adoption of these technologies and determine the policy measures required to facilitate their use. This marks a pivotal shift in the U.S. approach to digital finance, as Washington moves from reacting to innovation to proactively shaping it. The goal is to position the United States as a global leader in smart regulation of digital assets, ensuring that technological advancement does not come at the expense of financial integrity [1].

The consultation is particularly significant for the stablecoin sector, which is now subject to the same anti-money laundering regulations as traditional financial institutions. Issuers must comply with customer verification obligations and submit to federal compliance requirements. This reflects a growing emphasis on accountability in the digital finance space and highlights the administration’s commitment to addressing the risks associated with digital assets [2].

Sources:

[1] https://home.treasury.gov/news/press-releases/sb0228

[2] https://www.federalregister.gov/documents/2025/08/18/2025-15697/request-for-comment-on-innovative-methods-to-detect-illicit-activity-involving-digital-assets

[3] https://www.ledgerinsights.com/treasury-seeks-input-on-digital-asset-illicit-finance-detection-methods/

[5] https://bravenewcoin.com/insights/us-treasury-eyes-digital-id-in-defi-smart-contracts-to-curb-illicit-finance

[6] https://coincentral.com/treasury-seeks-public-ideas-to-tackle-crypto-crime-under-genius-act/

[7] https://idtechwire.com/u-s-treasury-opens-consultation-on-digital-id-in-defi-smart-contracts/

[8] https://crypto.news/treasury-seeks-public-input-on-detection-of-illicit-activity-in-digital-assets/