On August 18, the U.S. Department of the Treasury issued a Request for Comment (RFC) in a direct step toward implementing the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) and in support of the Administration’s policy on digital assets outlined in Executive Order (E.O.) 14178. The RFC fulfills a specific requirement of the GENIUS Act that directs the Secretary of the Treasury to seek public comment on "innovative or novel methods, techniques, or strategies that regulated financial institutions use, or have the potential to use, to detect illicit activity involving digital assets.” The deadline to submit comments is October 17, 2025.
Key Takeaways
Specific Areas of Inquiry
Treasury is requesting specific information on the risks, benefits, challenges, and safeguards related to the use of four key technologies: application program interfaces (APIs), artificial intelligence (AI), digital identity verification, and blockchain technology and monitoring. For each technology, the RFC asks for information on:
- How financial institutions are using it for anti-money laundering (AML), counter-financing of terrorism (CFT), and sanctions compliance.
- The factors institutions consider when deciding whether to adopt it.
- How the tool integrates with existing compliance systems (e.g., to augment or replace them).
- Any regulatory, legislative, supervisory, or operational obstacles to its adoption.
Feedback Requested on Key Technologies
- APIs: Treasury describes APIs as “a system access point or library function that allow different software applications to communicate and interact with each other, including internal and external applications.” The RFC notes that APIs can be used to automatically share data and provide access to transaction information, enforce access controls, monitor transactions, and bolster the security of financial institutions. Treasury is seeking information on how APIs are used to access data for compliance purposes, the benefits and risks of their use, and the specific compliance functions they support.
- AI: The RFC characterizes AI as a tool used to “analyze transactional data and identify complex illicit financial networks.” Treasury is interested in how AI, particularly machine learning, can learn from data to identify financial crime and adapt with minimal human intervention.
- Digital Identity Verification: Treasury describes this as “the process of establishing and verifying that a person is who they claim to be in a digital context.” The RFC notes that these tools, also known as identity proofing, are being developed in the digital asset industry to create “portable digital identity credentials” that can support AML and sanctions compliance while also working to “maximize user privacy.” Treasury also suggests these tools could be used by decentralized finance (DeFi) smart contracts to automatically check user credentials before a transaction is executed. It is interested in tools that can provide portable digital identity credentials, how they support AML/CFT efforts, and how they balance compliance standards with user privacy.
- Blockchain Technology and Monitoring: The RFC describes the use of this technology as a way to “evaluate high-risk counterparties and activities, analyze transactions across multiple blockchains, trace or monitor transaction activities, and identify patterns that indicate potential illicit transactions.” Treasury is interested in how financial institutions are leveraging blockchain analytics to track and observe on-chain activity and how that data is integrated with off-chain data. It also requests information on how this data is integrated with off-chain data and any challenges associated with tools like obfuscation methods.
Industry Implications
The RFC confirms that regulators are actively moving forward with implementing the GENIUS Act and the policies of Executive Order 14178. The high level of detailed information sought through the RFC indicates that the government is gathering data to inform new regulatory guidelines that could encourage or even require specific technologies to combat financial crime as it relates to digital assets. Indeed, the focus on these technologies may suggest that regulators already have certain frameworks in mind. For financial institutions and other entities that work with digital assets, the RFC provides a valuable opportunity to submit meaningful comments and help shape future regulatory approaches.
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