U.S. Treasury Seeks Public Input on AI and Digital ID Tools to Combat Stablecoin Laundering

The U.S. Treasury Department has launched a 60-day public comment period to gather input on the use of advanced technologies in combating money laundering and sanctions evasion related to digital assets, particularly stablecoins [2]. This initiative is part of the implementation of the recently signed GENIUS Act, a legislative milestone enacted on July 18, 2025, and signed by President Donald Trump [3]. The law mandates the Treasury to assess innovative compliance tools and regulatory approaches for stablecoin issuers, which are now classified as financial institutions under the Bank Secrecy Act [1].

The feedback request, published on August 18, 2025, across the Treasury’s official website, the Federal Register, and partner agencies like FinCEN and the IRS, outlines four key technological areas for evaluation: Application Programming Interfaces (APIs), Artificial Intelligence (AI), digital identity verification, and blockchain monitoring techniques [5]. The Treasury is specifically seeking input from financial institutions, technology companies, and advocacy groups on the effectiveness, challenges, and potential improvements of these tools in detecting illicit activity within the digital asset ecosystem [1].

According to the Treasury notice, these technologies could enable financial institutions to detect complex money laundering schemes involving drug trafficking, ransomware attacks, and state-sponsored financial evasion by actors linked to countries such as Iran and the Democratic People’s Republic of Korea [5]. The request emphasizes the importance of balancing innovation with practicality, noting that while new tools offer enhanced detection capabilities, they may also introduce operational costs and privacy concerns [4].

The consultation aligns with the objectives of Executive Order 14178, issued on January 23, 2025, which aims to strengthen U.S. leadership in digital financial technology. A key recommendation from the President’s Working Group on Digital Asset Markets—established under this executive order—was to evaluate digital identity tools and enhance information-sharing between the public and private sectors [6]. The Treasury’s request also reflects a broader shift toward preemptive compliance, particularly in decentralized finance (DeFi), where digital identity systems could be integrated into smart contracts to prevent illicit transactions before they occur [5].

Public comments, which must be submitted electronically via regulations.gov by October 17, 2025, will directly inform Treasury research and any subsequent regulatory or legislative changes. The Treasury has emphasized that all submissions will be publicly accessible, with strict warnings against including personally identifiable or confidential information [9]. Once the comment period concludes, the Treasury will prepare a report for Congress, summarize key findings, and potentially issue formal guidance or initiate rulemaking [1].

This public consultation underscores the U.S. government’s recognition of the need for adaptive, tech-driven solutions in the fight against financial crime. It also highlights the growing importance of collaboration between regulators, innovators, and industry participants in shaping a robust and resilient digital financial ecosystem [7]. As the feedback period progresses, the focus remains on ensuring that any regulatory approach is both effective in preventing abuse and supportive of innovation in the rapidly evolving digital asset landscape [8].

Source:

[1]title1.............................(https://www.ainvest.com/news/treasury-seeks-public-feedback-stablecoin-aml-compliance-genius-act-2508/)

[2]title2.............................(https://coindoo.com/trumps-new-stablecoin-law-triggers-public-debate-in-the-u-s/)

[3]title3.............................(https://www.ainvest.com/news/treasury-launches-stablecoin-consultation-genius-act-2508/)

[4]title4.............................(https://cointelegraph.com/news/us-treasury-digital-id-defi-illicit-finance)

[5]title5.............................(https://www.tradingview.com/news/cointelegraph:0e244adeb094b:0-us-treasury-weighs-digital-id-verification-in-defi-to-tackle-illicit-finance/)

[6]title6.............................(https://www.mitrade.com/au/insights/news/live-news/article-3-1046003-20250817)

[7]title7.............................(https://tradersunion.com/news/cryptocurrency-news/show/440379-u-s-treasury-opens-public-consultation/)

[8]title8.............................(https://bravenewcoin.com/insights/us-treasury-considers-digital-id-requirements-for-defi-platforms-to-combat-financial-crime)

[9]title9.............................(https://news.bitcoin.com/genius-act-triggers-treasury-request-for-anti-money-laundering-tech-feedback/)