The United States Department of the Treasury is looking for public comments on how digital identity tools and other emerging technologies could be used to combat illegal finances in cryptographic markets, and an option is integrating identity controls into intelligent decentralized finance contracts (Defi).
The consultation, published this week, is derived from the recently promulgated guide and establishes the National Innovation Law for National Innovation for the United States (Genius Law), signed in July.
The Law, which establishes a regulatory framework for the issuers of Stablecoin of payment, addresses the Treasury to explore new compliance technologies, including the application programming interfaces (API), artificial intelligence, digital identity verification and blockchain monitoring.
One of the ideas in the request for comments is the potential of the DEFI protocols to integrate digital identity credentials directly into their code. According to this model, an intelligent contract could automatically verify a user’s credential before executing a transaction, effectively building its client (KYC) and safeguards against money laundering (AML) in Blockchain infrastructure.
Related: Genius law to cause a wave of ‘murderous applications’ and new payment services: Sygnum
Treasury: digital identifications could reduce compliance costs
According to the Treasury, digital identity solutions, which may include government identifications, biometry or portable credentials, could reduce compliance costs while strengthening privacy protections.
They could also facilitate that financial institutions and defi services detect money laundering, terrorism financing or sanctions evasion before transactions occur.
The treasure also recognized potential challenges, including data privacy concerns and the need to balance innovation with regulatory supervision. “The treasure welcomes any matter that commentators believe it is relevant to the efforts of the treasure,” the agency wrote.
Public comments are open until October 17, 2025. After consultation, the Treasury will present a report to Congress and can issue guidance or propose new rules based on findings.
Related: The prohibition of performance of the genius law can push billions to tokenized assets: former executive bank
US banks warn against Stablecoin’s performance the escape
Last week, several important US banking groups, led by the Bank Policy Institute (BPI), urged Congress to harden the rules under the genius law, warning that a lagoon could allow Stablecoin emitters to overlook the restrictions to pay interest.
In a letter sent on Tuesday, BPI said that the gap could allow the emitters to associate with exchanges or affiliates to offer yields, undermining the intention of the law. The group warned that the un controlled growth of the stable performance could cause up to $ 6.6 billion in deposit outputs of traditional banks, threatening credit access to companies.
Magazine: Bitcoin vs Stablecoins Showdown is coming as the genius law approaches
