Galaxy Warns: Senate Crypto Bill Expands Treasury Surveillance Powers

Galaxy Warns About New Treasury Powers in the Crypto Sector

Galaxy Digital has raised alarms regarding a proposed legislative framework for the crypto market introduced by the U.S. Senate Banking Committee, which would grant the U.S. Treasury extended oversight and enforcement powers. This initiative has been described as the largest expansion of financial oversight authorities since the adoption of the Patriot Act.

According to a report published on Tuesday, Galaxy emphasized that the Senate's proposal significantly exceeds the CLARITY Act, which was passed by the House of Representatives, particularly concerning measures against illicit funding. At the core of Galaxy's warning is a new specific authority for crypto, dubbed "special measures," which would allow the Treasury to designate foreign jurisdictions, financial institutions, or entire classes of digital asset transactions as primary concerns in combating money laundering.

Additionally, the bill introduces a formal framework for "temporary freezing" of digital asset transactions, enabling government agencies to request issuers of stablecoins and service providers to freeze transactions for up to 30 days, without obtaining a prior court order.

Galaxy also highlighted language in the bill targeting so-called "DeFi only" protocols, which could impose obligations related to the Bank Secrecy Act on individuals or groups that exert significant control over the functionality of a DeFi protocol.

"If the powers outlined in the SBC bill were to become law, we believe it would represent the largest expansion of financial supervisory authorities since the enactment of the USA PATRIOT Act," stated Galaxy representatives.

At the same time, the Crypto Council for Innovation (CCI) has praised the updated text of the Senate bill, noting it reflects continued maintenance of a crucial policy priority for today's digital assets.

On the other hand, the Senate Agriculture Committee has postponed discussions on this bill, citing the need to garner broader bipartisan support.