U.S. Treasury Seeks Public Feedback on Stablecoin AML Compliance Under New Genius Act

The U.S. Treasury has initiated a public comment period to guide the implementation of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, a law signed into effect on July 18 by President Donald Trump [1]. The law mandates that stablecoin issuers comply with anti-money laundering (AML) regulations under the Bank Secrecy Act and requires the Treasury to solicit feedback on methods to detect and mitigate illicit financial activity involving digital assets. The comment period is open until October 17 [2].

In a notice issued by the Treasury, the department invited “interested individuals and organizations” to share innovative strategies for identifying and reducing risks such as money laundering and other forms of illicit finance linked to cryptocurrencies [1]. Treasury Secretary Scott Bessent emphasized the importance of the initiative, stating that it was “essential” for upholding American leadership in the digital asset space [1]. The Treasury plans to evaluate the submitted feedback and present findings to the Senate Banking Committee and House Financial Services Committee.

The implementation of the GENIUS Act is scheduled to begin either 18 months after the law was enacted or 120 days after the Treasury and Federal Reserve finalize regulations [1]. This timeline suggests the law will likely avoid becoming a major campaign issue for the 2026 midterm elections, as it may not take full effect before that period.

The legislation is one of three crypto-related bills passed during the House’s “crypto week” in July, alongside the Digital Asset Market Clarity (CLARITY) Act and the Anti-CBDC Surveillance State Act [1]. These bills received bipartisan support and have now been sent to the Senate, which remains in recess until September. The Senate Banking Committee has indicated its intention to prioritize crypto-related legislation, including its own version of the CLARITY Act, by October [1].

A key aspect of the public comment process involves identifying the role of technologies such as application programming interfaces (APIs), artificial intelligence (AI), digital identity verification, and blockchain monitoring tools in enhancing compliance and transparency [1]. The Treasury also aims to collaborate with agencies such as the IRS to strengthen oversight of digital assets and combat fraud [5].

Industry groups have expressed a range of opinions regarding the new regulatory framework. While some support the measures, others have flagged concerns over potential regulatory gaps. Specifically, the law contains exceptions that allow private nonfinancial institutions to issue stablecoins, raising questions about the adequacy of oversight and the potential for regulatory arbitrage [6].

The broader regulatory environment reflects a global trend of increased scrutiny over stablecoins, given their potential for facilitating fast and low-cost transactions while also posing risks for financial crime. The U.S. Treasury’s approach appears to emphasize a balanced strategy that promotes innovation while reinforcing existing financial safeguards [3].

As the comment period progresses, stakeholders are expected to contribute insights that will shape the final regulations governing stablecoin operations. The outcome of this process will be closely observed by financial institutions, market participants, and regulators, who will assess how effectively the law can enforce compliance without stifling innovation [4].

Source:

[1] title1.............................(https://cointelegraph.com/news/us-treasury-public-comment-stablecoin-bill)

[2] title2.............................(https://www.theblock.co/post/367291/us-treasury-issues-call-for-public-comment-on-illicit-activity-following-trump-signing-genius-stablecoin-act-into-law)

[3] title3.............................(https://www.coindesk.com/policy/2025/08/18/u-s-treasury-department-starts-work-on-genius-gathering-views-on-illicit-activity)

[4] title4.............................(https://www.thestreet.com/crypto/policy/genius-act-closer-to-law-amid-fentanyl-warning)

[5] title5.............................(https://tax.thomsonreuters.com/news/irs-asks-for-help-with-combatting-digital-asset-fraud/)

[6] title6.............................(https://www.mondaq.com/unitedstates/financial-services/1667174/trade-groups-urge-congress-to-address-genius-act-loopholes)