Golden Finance reported that the U.S. Treasury Department has initiated a public consultation under the 'GENIUS Act' to explore the integration of digital identity verification tools in DeFi smart contracts to combat illegal financial activities. The proposal includes automatically executing KYC/AML checks on-chain via API interfaces, while using technologies such as biometrics to reduce compliance costs. Banking groups have warned that if there are regulatory loopholes in stablecoin interest payments, it could lead to a $6.6 trillion outflow of bank deposits. The public consultation will last until October 17, 2025, after which the Treasury will submit a report to Congress and may introduce new regulations.