As digital asset adoption grows, regulators are increasing efforts to prevent illicit financial activity, and in this U.S. Treasury has made a bold move.
Under the GENIUS Act, the U.S. Treasury was tasked with studying tools to detect illicit activity involving digital assets. As a part of the process, the Treasury reviewed industry feedback and examined technologies such as AI, digital identity, blockchain analytics, and APIs.
In this, they also found the risks linked to digital assets. These included the misuse of mixers, distributed ledgers, and DeFi, while outlining measures to combat illicit crypto finance.
Stablecoins take centre stage from a regulatory point of view
Seeing such setbacks, the report calls for stronger monitoring of the crypto ecosystem, particularly stablecoins. Treasury data shows stablecoins accounted for about 84% of illicit crypto transaction volume in 2025, making them a key focus for regulators.
To address this risk, the Treasury proposes AI-powered monitoring tools and real-time blockchain analytics to track transactions involving unhosted wallets and decentralized platforms.
Under this framework, major stablecoin issuers could be treated more like regulated financial institutions with stricter compliance requirements.
Remarking on the same, Galaxy Research Head Alex Thorn also weighed in,
Source: Alex Thorn/X
Rising criminal and state-backed threats
Beyond regulation, the report also highlighted the growing scale of cybercrime and state-backed activity in the crypto sector.
One major concern came from North Korea, which emerged as one of the most aggressive cyber actors targeting the industry.
Using advanced hacking and social engineering tactics, North Korean groups stole $1.5 billion in crypto in early 2025, bringing their estimated total to $2.8 billion over the past two years, reportedly used to fund weapons programs.
At the same time, online scams are also expanding rapidly.
Source: Alex Thorn/X
This highlights how the Treasury’s findings are closely tied to the proposed CLARITY Act, which aims to create clearer regulatory rules for digital assets rather than forcing crypto into traditional banking frameworks.
The need for tighter oversight
Additionally, the 2026 Chainalysis report recently highlighted how sanctioned entities moved around $104 billion through cryptocurrency in 2025, representing a massive 694% increase from the previous year.
Together, these findings deepen the Treasury’s concerns and may push lawmakers toward advancing legislation like the CLARITY Act.
Final Summary
- With stablecoins linked to a large share of illicit transactions, regulators are prioritizing stricter oversight of issuers and transaction flows.
- North Korean hacks, global scams, and sanctions evasion highlight how crypto is increasingly tied to international security concerns.
Source: https://ambcrypto.com/north-korea-steals-2-8b-in-2-years-heres-what-u-s-treasury-wants-to-do/
