The US Treasury is seeking public feedback on how digital identity tools and other new technologies can be used to combat illegal finance in the crypto market.
The consultations announced this week stem from the establishment of the newly enacted guide and the National Innovation Act (Genius Act), which was signed into law in July.
The legislation, which sets a regulatory framework for stable payment issuers, directs the Ministry of Finance to explore new compliance technologies such as application programming interfaces (APIs), artificial intelligence, digital identity verification, and blockchain surveillance.
One idea for requesting comments is the possibility that the Defi protocol will integrate digital ID credentials directly into the code. In this model, smart contracts can automatically validate user credentials before running a transaction, effectively constructing customers (KYC) and money laundering anti-moneying (AML) and protecting them in blockchain infrastructure.
The Ministry of Finance is considering defi digital ID verification. sauce: Raz
Related: Genius acts that trigger a wave of “killer apps” and new payment services: sygnum
Ministry of Finance: Digital IDs may reduce compliance costs
According to the Treasury, digital identity solutions that include government IDs, biometrics, or mobile certifications could reduce compliance costs while enhancing privacy protection.
It can also facilitate financial institutions and definition services to detect money laundering, terrorist financing, or sanctions avoidance before a transaction occurs.
The Treasury also acknowledged potential challenges, including data privacy concerns and the need to balance innovation. “The Treasury welcomes opinions on issues that commenters believe are related to the Treasury efforts,” the agency wrote.
Public comments will be published until October 17th, 2025. Following consultations, the Treasury may submit a report to Congress and issue guidance based on the findings or propose new rules.
Related: A ban on yields on genius behavior could push the trout into tokenized assets – former bank enforcer
US banks warn against loopholes in stubcoin yield
Last week, several major US banking groups led by the Institute for Banking Policy (BPI) urged Congress to strengthen rules under the Genius Act, warning that loopholes would allow Stablecoin issuers to avoid interest restrictions.
In a letter sent Tuesday, BPI said the gap could allow issuers to partner with exchanges and affiliates to provide yields, undermining the intent of the law. The group warned that unidentified growth in stubcoins, which retain the yield, could lead to deposits of up to $6.6 trillion from traditional banks, threatening corporate credit access.
magazine: As the Genius Act approaches, the Bitcoin vs Stablecoins showdown approaches
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