The US Department of the Treasury is inviting public feedback on utilizing digital identity tools and emerging technologies to combat illicit activities in cryptocurrency markets. This initiative follows the recent enactment of the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), which provides a regulatory framework for stablecoin issuers. The Treasury is exploring compliance technologies, including APIs, AI, digital identity verification, and blockchain monitoring. One proposal suggests integrating digital identity credentials into decentralized finance (DeFi) smart contracts, allowing automatic verification of user credentials before transaction execution, thereby enhancing Know Your Customer (KYC) and Anti-Money Laundering (AML) measures. Digital identity solutions, such as government IDs and biometrics, could lower compliance costs while improving privacy protections. However, the Treasury also recognizes potential challenges, including data privacy issues. Public comments are open until October 17, 2025, after which the Treasury will report to Congress and may propose new regulations. Read more AI-generated news on: https://app.chaingpt.org/news

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