The U.S. Department of the Treasury issued a Request for Comment required by the recently passed Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), seeking public input on the use of innovative or novel methods, techniques, or strategies to detect and mitigate illicit finance risks involving digital assets. The Request also furthers the Administration’s policy of supporting the responsible growth and use of digital assets, as set out in Executive Order 14178 on “Strengthening American Leadership in Digital Financial Technology.”
Now is a pivotal moment to submit public input and help shape the evolving anti-money laundering framework for digital assets, while regulators are actively considering industry perspectives.
In particular, Treasury seeks public comment on four specific technologies: application program interfaces (APIs), artificial intelligence (AI), digital identity verification, and use of blockchain technology and monitoring. The Request includes specific questions for commentors to respond to concerning each technology. Treasury, in turn, will use public comments to inform its research in the following areas, as specified in the GENIUS Act: a) improvements in ability of financial institutions to detect illicit activity involving digital assets; b) costs to regulated financial institutions; c) the amount and sensitivity of information that is collected or reviewed; d) privacy risks associated with the information that is collected or reviewed; e) operational challenges and efficiency considerations; f) cybersecurity risks; and g) effectiveness of the methods, techniques, or strategies in mitigating illicit finance.
The deadline for interested parties to submit comments is October 17, 2025. In addition to the Request, the GENIUS Act directs Treasury to conduct a risk assessment as part of the national strategy for combating terrorist and other illicit financing considering the following areas: 1) the source of illicit activity, such as money laundering and sanctions evasion involving digital assets; 2) the effectiveness of and gaps in existing methods, techniques, and strategies used by regulated financial institutions in detecting illicit activity, such as money laundering, involving digital assets; 3) the impact of existing regulatory frameworks on the use and development of innovative methods, techniques, or strategies by regulated financial institutions; and 4) any foreign jurisdictions that pose a high risk of facilitating illicit activity through the use of digital assets to obtain fiat currency.
Once both the research from the Request and the risk assessment are complete, the GENIUS Act directs Treasury to issue public guidance and notice and comment rulemaking based on their results, no later than July 2028, relating to the following:
- The implementation of innovative or novel methods, techniques, or strategies by regulated financial institutions to detect illicit activity involving digital assets.
- Standards for payment stablecoin issuers to identify and report illicit activity involving the payment stablecoin of a permitted payment stablecoin issuer, including, fraud, cybercrime, money laundering, financing of terrorism, sanctions evasion, or insider trading.
- Standards for payment stablecoin issuers’ systems and practices to monitor transactions on blockchains, digital asset mixing services, tumblers, or other similar services that mix payment stablecoins in such a way as to make such transaction or the identity of the transaction parties less identifiable.
- Tailored risk management standards for financial institutions interacting with decentralized finance protocols.
The GENIUS Act further directs Treasury to draft a report to Congress by January 2026 that, among other things, summarizes Treasury’s recommendations on allowing regulated financial institutions to develop and implement novel and innovative methods, techniques, or strategies to detect illicit activity involving digital assets.
