U.S. Treasury Opens Public Comment Period on Stablecoin Illicit Finance Under GENIUS Act

The U.S. Department of the Treasury issued a call for public comment, seeking innovative strategies to detect and combat illicit activity involving digital assets—this effort is a direct requirement under the newly enacted GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act). Source

Signed into law by President Trump on July 18, 2025, the GENIUS Act marks the first comprehensive federal regulatory framework for payment stablecoins—cryptocurrencies pegged to traditional monetary value (typically the U.S. dollar or equivalent safe assets). The legislation mandates key compliance measures including:

• One-to-one reserve backing with low-risk assets such as U.S. Treasuries.

• Monthly disclosures and independent audits for transparency.

• Adherence to the Bank Secrecy Act, including anti-money laundering (AML) protocols and sanctions compliance

• Revised bankruptcy priorities, granting stablecoin holders first claim on issuer reserves

What Is the Treasury Soliciting?

Treasury’s public notice invites inputs on “innovative or novel methods, techniques, or strategies to detect and mitigate illicit finance risks involving digital assets,” focusing on areas such as:

• Use of application programming interfaces (APIs)

• Artificial intelligence (AI)

• Digital identity verification

• Blockchain monitoring technologies

Interested individuals and organizations must submit comments by October 17, 2025. Treasury intends to integrate the findings and recommendations into its reports to Congressional oversight committees.

Why This Matters

1. Bridging Regulatory Gaps
   Stablecoins, with their pseudonymous and borderless nature, have long posed AML and illicit finance risks. By inviting public input, the Treasury is proactively tapping into emerging technologies and expertise to fill enforcement gaps

2. Enhancing National Financial Security
   The GENIUS Act strengthens U.S. oversight of stablecoins—considered a pathway to faster payments—by bolstering AML enforcement and protecting dollar supremacy in the digital era

3. Legislating Responsively
   The one-year implementation timeline starting from enactment gives Treasury and other regulators time to build rulemaking frameworks that reflect both innovation and risk management, with this public comment period being a key early step

Looking Ahead

• Comment Period Deadline: October 17, 2025

• Next Steps: Treasury to analyze submissions and deliver findings to Congressional committees

• Upcoming Rulemaking: Over the next year, regulators must roll out detailed oversight rules, ranging from reserve standards to interoperability and licensing protocols