Treasury Seeks Input on Crypto Monitoring as Tari and Industry May Turn to Zero-Knowledge Privacy Compliance

• Treasury solicits comment on APIs, AI, digital ID, and blockchain monitoring under the GENIUS Act.

• Industry favors reusable KYC and zero-knowledge proofs to enable compliance without exposing personal data.

• Comments due October 17; Treasury will compile a report for the Senate and House committees.

Treasury crypto monitoring: comment requested on privacy-preserving compliance and zero-knowledge proofs—submit feedback by Oct 17 to shape policy and industry standards.

What is the Treasury crypto monitoring request?

The Treasury crypto monitoring request is a Federal Register notice asking for industry comment on “innovative or novel” measures—APIs, AI, digital ID verification, and blockchain monitoring—to detect and mitigate illicit cryptocurrency use under provisions of the GENIUS Act. Responses will inform a congressional report and potential guidance.

How can privacy-preserving compliance work with KYC/AML?

Privacy-preserving compliance pairs selective disclosure and cryptographic proofs with minimum-data collection. Experts quoted in plain text (Katie Evans, Swarm; Harry Halpin, Nym; Riccardo Spagni and Naveen Jain, Tari) recommend reusable credentials, zero-knowledge proofs, and selective attestations to limit repeated uploads of government IDs and reduce breach risk.

Frequently Asked Questions

Why is the Treasury seeking public comment on blockchain monitoring?

The Treasury aims to assess how emerging tools can help regulated institutions detect illicit activity while identifying privacy risks. The compiled responses will guide Congressional committees and inform potential legislation or regulatory guidance.

How do zero-knowledge proofs reduce privacy risk in KYC/AML?

Zero-knowledge proofs let a user prove compliance attributes (age, sanction-free status, valid KYC) without revealing the underlying personal data. This approach supports reusable credentials and selective disclosure, limiting exposure of personal information across platforms.

How can platforms implement privacy-preserving monitoring?

Implement reusable KYC credentials and selective disclosure. Build cryptographic attestations (zk-proofs) so platforms verify required attributes without accessing raw personal data. Limit data retention and require minimal fields to achieve AML objectives.

What practical steps should developers and firms take?

1. Standardize reusable credentials and revocation lists. 2. Integrate zk-proof libraries where applicable. 3. Design APIs that return attestations, not raw PII. 4. Adopt privacy-by-design and clear data minimization policies. These steps help balance compliance with user privacy.

HowTo: Deploy a privacy-first compliance flow with zero-knowledge proofs

1. Issue reusable credentials: Verify identity once and issue cryptographic credentials stored client-side.
2. Use selective disclosure: Allow users to prove specific attributes (e.g., sanction-free) without revealing full identity.
3. Verify with zk-proofs: Integrate zero-knowledge verification so the platform checks proofs instead of raw documents.
4. Log minimal telemetry: Record attestations and verification outcomes, not personal identifiers.
5. Maintain revocation and auditability: Provide mechanisms to revoke credentials and support lawful investigations with controlled access.

Key Takeaways

• Treasury action: The Department requests comment on APIs, AI, digital ID, and blockchain monitoring under the GENIUS Act.
• Privacy-first tools: Reusable KYC, selective disclosure, and zero-knowledge proofs are favored to meet AML needs while protecting users.
• Industry role: The sector will largely inform Treasury recommendations; timely, practical submissions can shape balanced policy.

Conclusion

The Treasury crypto monitoring request marks a pivotal moment for shaping privacy-preserving compliance. Industry consensus favors solutions—like reusable KYC and zero-knowledge proofs—that enable AML effectiveness without broad data exposure. Stakeholders should submit concise, technical feedback by October 17 to influence upcoming guidance and legislation.

By COINOTAG • Published: 2025-08-20 • Updated: 2025-08-20