Key Takeaways
- The U.S. Treasury is requesting public comments until October 17 on innovative methods to detect money laundering, sanctions evasion, and related illicit crypto activity
- Focus areas include, for example, AI monitoring, blockchain analytics, and digital identity tools, which are critical for enforcing the GENIUS Act’s stablecoin rules.
- Stablecoin issuers must now comply with strict AML laws, including full reserves and audits, as the U.S. pushes its global crypto leadership under Trump’s mandate.
Table of Contents
The GENIUS Act: Gaining Control Over Illicit Crypto Activity
The U.S. Treasury is asking for the public’s help in its latest push to end illicit crypto activity by crowdsourcing ideas as part of the GENIUS Act, signed into law by President Trump in July. The Treasury is soliciting examples of how to toggle on Artificial Intelligence (AI), blockchain tracking, and digital IDs to catch bad actors. It is a literal “Spot the Criminal” hackathon with winning technologies that will ensure the U.S. crypto regulatory future.
This is not just an example of the bureaucracy going through the process. The GENIUS Act now requires stablecoin issuers (like Tether and Circle) to comply with banking regulations, including holding reserves in full trust, requiring transparency, and anti-money laundering (AML) checks. Now, the Treasury is interested in flexible new tech-based solutions that satisfy these frameworks without sacrificing innovation.
Why Stablecoins Are in the Crosshairs
STABLECOINS = The dollar-backed workhorses of crypto. It is believed that more than $10 trillion is processed annually, turning it into an illicit crypto activity flow magnet.
The GENIUS Act forces token issuers to:
- Back every token 1-to-1 with cash or Treasury securities
- Submit to periodic audits
- Comply with AML regulations (like tracking suspicious transactions).
But here’s the catch: How to monitor transactions that have taken place in decentralized networks without invading privacy? The Treasury’s request for comments conjures ideas like:
- AI-driven data on blockchain surveillance
- Digital identity checks, balancing KYC with privacy and anonymity
- Online Application Programming Interfaces (APIs) developed for real-time compliance in transactions between exchanges and regulatory agencies.
Opponents of excessive monitoring caution this may overreach. On the other hand, Treasury Secretary Scott Bessent suggests, “It’s a win-win-win for everyone involved: stablecoin users, stablecoin issuers, and the U.S. Treasury Department.”
A Worldwide Template for Crypto Regulations
To this point, the U.S. is not only trying hard to regulate crypto, but it is also selling itself as the world’s stablecoin hub. By 2026, GENIUS-compliant issuers could occupy significant space in the market, displacing ambiguous competitors. To the investing public, this means more and safer stablecoin options, but a potentially more centralized control.
Final thought: With the comment deadline set for October 17, the question is: Can you end the illicit crypto activity without killing crypto’s freedom?
FAQs
What’s the GENIUS Act?
A U.S. law requiring stablecoin issuers to maintain full reserves, undergo audits, and follow strict anti-money laundering (AML) rules.
How does AI fit into crypto regulation?
AI could analyze blockchain patterns to flag suspicious transactions (e.g., mixing services, ransomware payments, etc.).
Will this affect Bitcoin or just stablecoins?
Primarily stablecoins, but tools developed here may later apply to BTC/ETH and other transactions.
For more illicit crypto activity stories, read: U.S. Hunts Garantex Leaders: $6M Bounty as Treasury Sanctions Russian Crypto Exchange Over $100M in Illicit Flows
