Government requested public suggestions for identifying illicit actions in digital currencies
The U.S. government is taking steps to bolster its leadership in the digital assets sector and enhance national security, with the introduction of the GENIUS Act and Executive Order 14178.
One of the key aspects of the GENIUS Act is the creation of a comprehensive regulatory framework for stablecoin issuers in the United States. This framework aims to promote transparency and accountability in the digital asset market.
Meanwhile, Hong Kong's Securities and Futures Commission (SFC) has reported a rise in fraud risks in the crypto sector following the implementation of stablecoin law. This underscores the need for robust security measures in the digital asset industry.
To address this need, platforms like Chainalysis and TRM Labs have become critical components in the cryptocurrency and blockchain security and analytics ecosystem. These platforms offer tools to detect and alert on potential threats and risks in the crypto sector.
The U.S. Treasury is now seeking public input on innovative methods to detect illicit activity in the digital assets industry. The key focus areas for this input include Application Programming Interfaces (APIs), Artificial Intelligence (AI) systems, digital identity verification mechanisms, and blockchain monitoring tools.
The Treasury is interested in how these technologies are currently used or could be used to augment or replace existing methods. The input will address factors such as effectiveness in detecting illicit activity, costs incurred by financial institutions, privacy and cybersecurity risks, operational challenges, and overall impact on mitigating financial crime within the digital asset ecosystem.
This effort implements Section 9(a) of the GENIUS Act and aligns with Executive Order 14178 and other related initiatives aimed at promoting responsible digital asset growth and enhanced anti-money laundering/counter-terrorist financing (AML/CFT) measures through public-private collaboration.
Interestingly, the Treasury's move aligns with Trump's executive order on "Strengthening American Leadership in Digital Financial Technology," signed on January 23, 2025. The Treasury will use public input to inform its research on aspects such as effectiveness, costs, privacy features, and cybersecurity risks of these tools.
This collaborative approach emphasizes the U.S. government's commitment to fostering a secure and responsible digital asset industry.
[1] GENIUS Act: https://www.congress.gov/bill/117th-congress/house-bill/3617 [2] Executive Order 14178: https://www.whitehouse.gov/briefing-room/presidential-actions/2021/03/09/executive-order-on-ensuring-american-leadership-in-technology-and-semiconductors-for-a-secure-and-resilient-america/ [3] Trump's executive order on digital financial technology: https://www.whitehouse.gov/presidential-actions/executive-order-strengthening-american-leadership-digital-financial-technology/ [4] SFC's statement on stablecoin law and fraud risks: https://www.sfc.hk/edistributionweb/gateway/EN/news-and-announcements/news/doc?refNo=21PR89 [5] Role of Chainalysis and TRM Labs in crypto security: https://www.chainalysis.com/ and https://trm-labs.com/
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