- The US Department of the Treasury seeks public input on new methods to detect illegal activities involving digital assets.
- Key technologies under review include APIs, Artificial Intelligence, digital identity verification, and blockchain monitoring.
- Illicit finance risks in digital assets have become more complex and harder to manage due to abundant data and advanced criminal methods.
- Recommendations call for clearer regulations, public-private collaboration, education, system integration, innovation incentives, and licensing exemptions for blockchain analysis firms.
In August 2025, the US Department of the Treasury issued a request for comment on innovative methods to detect illicit activity involving digital assets. The request focused on four technologies: application program interfaces (APIs), artificial intelligence (AI), digital identity verification, and blockchain technology and monitoring.
According to Elliptic, a blockchain intelligence provider with over ten years of experience, digital asset illicit finance risks have evolved and grown in complexity. Their 2025 Typologies Report highlights five emerging threats including AI-driven scams, large-scale fraud operations, misuse of stablecoins by sanctioned actors, cross-chain crime, and advanced obfuscation. They also noted that actors linked to the Democratic People’s Republic of Korea have stolen over $2 billion in digital assets in 2025 alone, with $1.5 billion taken from a single platform.
The main challenge is not a lack of data but managing the large volumes of on-chain information to identify illegal transactions. This situation requires financial institutions and law enforcement to use advanced analytics and blockchain intelligence to find actionable insights at scale.
Elliptic emphasized the need for integrated approaches combining blockchain transparency, APIs, AI, and cross-chain analytics to tackle these threats effectively. However, regulatory barriers exist, especially when analyzing services under comprehensive sanctions, such as those based in Russia or Iran, due to licensing restrictions.
The company made several recommendations for improving illicit finance detection in digital assets. These include establishing clear regulatory guidance for blockchain analytics in anti-money laundering (AML), counter-terrorism financing (CFT), and sanctions compliance; promoting privacy-protected public-private data sharing; investing in education and training on blockchain analysis; supporting technical integration with current regulatory systems; encouraging innovation through grants and pilots; and considering licensing exemptions for firms conducting blockchain analysis relevant to sanctioned services.
As mandated by the GENIUS Act, the Treasury will research submitted public comments and report to Congress with legislative and regulatory proposals.
Elliptic expressed readiness to collaborate with the Treasury and regulators to develop responsible frameworks for digital assets that prevent illicit finance while enabling sector growth.
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