Treasury Wants Crypto Freeze Powers
The US Treasury is urging Congress to give crypto platforms explicit authority to freeze funds linked to suspected illicit activity, reflecting a push for increased oversight as digital assets become mainstream. This would significantly expand regulatory control over crypto exchanges and wallets, with major implications for both retail investors and the broader digital asset ecosystem.
The push for a "hold law" would grant crypto platforms a legal safe harbor to temporarily freeze assets they suspect are involved in illicit activities, allowing law enforcement time to investigate. This recommendation was part of a broader report to Congress required under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. This isn't the Treasury's first attempt to curb illicit crypto flows. In August 2022, its Office of Foreign Assets Control (OFAC) sanctioned the crypto mixer Tornado Cash, alleging it was used to launder over $7 billion. That move, however, faced legal challenges, with a federal appeals court ruling in November 2024 that OFAC had overstepped its authority. The Treasury officially lifted sanctions on Tornado Cash in March 2025. The legal battle raised questions about whether a decentralized, open-source software protocol could be sanctioned like a traditional entity. In a recent report, the Treasury acknowledged that crypto mixers can serve legitimate privacy purposes for lawful users who want to protect their financial data on public blockchains. This marks a nuanced shift from the agency's previous, more hardline stance. Despite this, the Treasury remains focused on criminal use. Its data shows that between January 2024 and September 2025, North Korean cybercriminals stole at least $2.8 billion in digital assets. The report also highlighted that since May 2020, over $1.6 billion from mixing services flowed into cross-chain bridges. The Financial Crimes Enforcement Network (FinCEN), a bureau within Treasury, has also been active. In October 2023, it proposed a rule to classify international crypto mixing as a "primary money laundering concern," which would increase reporting requirements for financial institutions. Concerns also extend to physical infrastructure. A recent Treasury report warned that crypto ATMs are becoming a preferred tool for fraud, with the FBI receiving over 10,900 complaints related to crypto ATM scams in 2024, totaling approximately $246.7 million in losses.
