On March 6, 2026, the U.S. Department of the Treasury sent a report to Congress on innovative technologies that can be used to counter illicit finance involving digital assets, as required by the Guiding and Establishing National Innovation for U.S. Stablecoins (“GENIUS”) Act that was signed into law on July 18, 2025. The report identifies several innovative tools that financial institutions can use to detect and combat the use of digital assets in transactions that violate anti-money laundering/countering the financing of terrorism (“AML/CFT”) and U.S. sanctions laws, including the use of artificial intelligence (“AI”), digital identity, blockchain analytics, and application program interfaces as tools and technologies capable of producing “positive” and “long-term” results in the fight against financial crime. According to the Department, more than 220 comments from industry stakeholders were considered when drafting the report.
After providing an overview of the various risks associated with digital assets, the U.S. Treasury indicated that the primary vulnerabilities associated with digital assets were digital asset services providers (“DASPs”) in foreign jurisdictions that lacked robust AML/CFT obligations or were not capable of complying with U.S. regulations. According to the Department, illicit actors often exploit the differences between laws and regulations in different jurisdictions to their advantage. Digital asset kiosks were also increasingly abused by illicit actors as they often fail to comply with AML/CFT regulations. The report also highlighted the heightened risks posed by digital asset mixing services, tumblers, and similar services that mix payment stablecoins in a way that makes it harder for regulators and law enforcement to identify transactions or parties responsible for illicit activity. The Department also acknowledged the use of decentralized finance (“DeFi”) platforms, including decentralized exchanges and bridges, as tools that North Korean cyber actors, in particular, have use to fund weapons of mass destruction and ballistic missile programs.
In the report, the Department also emphasized that its overarching policy principles for 2026 and beyond include the following:
1. steps to promote the use of innovative technologies by financial institutions to ensure AML/CFT compliance;
2. efforts to collaborate with key stakeholders to ensure that financial institution examiners incorporate emerging technologies to support AML/CFT programs; and
3. a collaboration with the National Institute of Standards and Technology (NIST) and other international bodies “to clarify technical principles and recommended standards to support the adoption of emerging technologies.”