Treasury Seeks Comments on Digital Asset Illicit Finance Risks

The Treasury Department issued a request for comment ("RFC") on methods to detect and mitigate illicit finance risks involving digital assets.

The RFC, required under the recently enacted GENIUS Act, seeks public input on "novel methods, techniques, or strategies" that financial institutions can use to strengthen anti-money laundering, counter-terrorist financing, and sanctions compliance in the digital asset ecosystem.

In its RFC, Treasury asked stakeholders to provide input on the four core areas identified in the GENIUS Act:

1. Application Programing Interfaces ("APIs"). Treasury asked how APIs can help financial institutions exchange data across systems, strengthen oversight of digital transactions, and improve the speed and integrity of compliance functions, as well as the obstacles that may limit their adoption.
2. Artificial Intelligence ("AI"). Treasury asked for feedback on the growing role of AI in identifying suspicious patterns and networks in transaction data, while also probing the risks of bias, opacity, and over-reliance on third-party models in compliance programs.
3. Digital Identity. Treasury said it is examining the use of digital identity solutions—including credentials that may be portable across platforms or that use biometrics—to support customer verification, balance privacy with compliance needs, and reduce duplicative onboarding processes.
4. Blockchain Analytics. Treasury asked for input on the effectiveness of monitoring tools that analyze public blockchain data to uncover illicit flows, evaluate counterparties, and trace complex activities.

Beyond those categories, Treasury asked about (i) key risks and vulnerabilities in the digital asset ecosystem, (ii) blockchain monitoring, and (iii) other innovative technologies, such as privacy-enhancing tools or smart contract verification. Treasury asked stakeholders to assess each area in terms of effectiveness, costs, privacy implications, operational feasibility, and cybersecurity risks, and to identify any regulatory or legislative changes that may be necessary.

Based on the feedback, Treasury said it will prepare a report for Congress with recommendations for legislative and regulatory changes and may also issue future guidance or rules.

Members of the public are encouraged to submit comments by October 17, 2025.