{"id":59294,"date":"2026-01-14T10:11:42","date_gmt":"2026-01-14T03:11:42","guid":{"rendered":"https:\/\/hbbgroup.net\/galaxy-compares-defi-provisions-in-crypto-bill-to-patriot-act-surveillance\/"},"modified":"2026-01-14T10:11:42","modified_gmt":"2026-01-14T03:11:42","slug":"galaxy-compares-defi-provisions-in-crypto-bill-to-patriot-act-surveillance","status":"publish","type":"post","link":"https:\/\/hbbgroup.net\/vi\/galaxy-compares-defi-provisions-in-crypto-bill-to-patriot-act-surveillance\/","title":{"rendered":"Galaxy Compares DeFi Provisions in Crypto Bill to Patriot Act Surveillance"},"content":{"rendered":"<div>\n<div>\n<h4 color=\"#333\">In brief<\/h4>\n<ul>\n<li>Galaxy Research says the Senate Banking draft embeds sweeping new illicit finance powers for the Treasury.<\/li>\n<li>The proposal includes transaction holds without court orders and expanded \u201cspecial measure\u201d authority.<\/li>\n<li>Industry voices warn unresolved gaps around privacy and risk still constrain adoption.<\/li>\n<\/ul>\n<\/div>\n<p><span>Galaxy Research warned that a draft crypto market-structure bill circulating in the Senate Banking Committee would significantly expand U.S. financial surveillance powers, arguing in a note that new Treasury authorities targeting decentralized finance frontends and transaction freezes could represent the largest such expansion since 2001.<\/span><\/p>\n<p><span>The analysis focuses on certain provisions from <\/span><a href=\"https:\/\/www.banking.senate.gov\/imo\/media\/doc\/senate_banking_committee_digital_asset_market_structure_legislation_discussion_draft.pdf\" target=\"_blank\"><span>the draft<\/span><\/a><span> that would grant the U.S. Treasury Department new escalation tools, including an expansion of \u201cspecial measure\u201d authority over digital assets and a statutory framework allowing transaction holds without a court order.<\/span><\/p>\n<p><span>The draft \u201cincludes substantially enhanced financial surveillance authorities to combat illicit finance than the House\u2019s CLARITY Act,\u201d Alex Thorn, head of firmwide research at Galaxy Digital, a major crypto and digital assets firm, wrote Tuesday.<\/span><\/p>\n<p><span>If the measures were to become law, it would \u201crepresent the single largest expansion to financial surveillance authorities since the USA PATRIOT Act,\u201d Thorn argued.<\/span><\/p>\n<p><span>Thorn was referring to a post-9\/11 <\/span><a href=\"https:\/\/www.congress.gov\/bill\/107th-congress\/house-bill\/3162\" target=\"_blank\"><span>legislative package<\/span><\/a><span> enacted in 2001 that significantly broadened federal surveillance and financial-monitoring powers, and has since reshaped how U.S. authorities track, share, and intervene in illicit finance across the banking system.<\/span><\/p>\n<p><span>Galaxy\u2019s warning comes as lawmakers continue to weigh how far to extend Treasury\u2019s role in policing crypto activity, with <\/span><a href=\"https:\/\/decrypt.co\/354371\/senate-bill-clarity-crypto-developer-liability-federal-law\" target=\"_blank\"><span>parallel efforts<\/span><\/a><span> in Congress focused on clarifying market structure and limiting developer liability under federal law. The Senate Banking Committee has <\/span><a href=\"https:\/\/decrypt.co\/354357\/markup-senate-crypto-market-structure-bill-pushed-late-january\" target=\"_blank\"><span>pushed<\/span><\/a><span> its next markup of the crypto market structure bill to later this month.<\/span><\/p>\n<p><span>The note describes a \u201ctemporary hold\u201d authority that would create a formal framework for pausing digital asset transactions at the request of law enforcement, paired with a statutory safe harbor for firms that comply in good faith.<\/span><\/p>\n<p><span>\u201cThis is a transaction-interruption lever designed to allow for streamlining of law enforcement requests along with a liability shield, making it much easier for stablecoin issuers or service providers to freeze funds quickly without a court order,\u201d the note reads.<\/span><\/p>\n<p><span>Galaxy also pointed to language that \u201cexplicitly creates the concept of a \u2018distributed ledger application layer,\u201d and requires Treasury to clarify sanctions and AML obligations for frontends operating in the U.S.<\/span><\/p>\n<h2 color=\"#333\"><b>Some gaps and risks<\/b><\/h2>\n<p><span>Industry observers say the debate exposes unresolved trade-offs between compliance, privacy, and the practical limits of scaling crypto in real-world business use.<\/span><\/p>\n<p><span>Debate around the bill \u201creflects a broader shift lawmakers are confronting\u201d where they were previously facing concerns on \u201cchoosing between transparency and privacy,\u201d Rob Viglione, CEO of zero-knowledge firm Horizen Labs, told <\/span><i><span>Decrypt<\/span><\/i><span>.<\/span><\/p>\n<p><span>\u201cEnterprises and institutions need confidentiality around sensitive business activity, while regulators need auditability. What\u2019s changed is that this need is no longer theoretical,\u201d he said.<\/span><\/p>\n<p><span>Activity within Ethereum-based ecosystems is increasing, Viglione added, noting that this means regulators will need to assess how they approach compliance \u201cwithout conflating auditability with expanded surveillance or shifting enforcement obligations onto non-custodial software layers.\u201d<\/span><\/p>\n<p><span>\u201cRegulatory ambiguity that treats infrastructure as a monitoring tool\u201d rather than directly \u201cenabling controlled disclosure within existing legal frameworks\u201d creates real risks for the industry, Viglione added.<\/span><\/p>\n<p><span>While the draft released this week is \u201ca step forward,\u201d it \u201cstill leaves major gaps for real-world payroll and business payments,\u201d Megan Knab, CEO and founder of Franklin, a financial operations platform supporting on-chain payroll, told <\/span><i><span>Decrypt<\/span><\/i><span>.<\/span><\/p>\n<p><span>Stablecoins are \u201cformally treated as money at the federal level,\u201d yet \u201cat least eight U.S. states continue to prohibit their use in wage payment,\u201d she said, adding that this shows \u201cthe patchwork of state laws and banking policies that employers still have to navigate.\u201d<\/span><\/p>\n<p><span>\u201cUntil those contradictions are addressed,\u201d businesses tied to digital assets and other on-chain operations would still be strained, and their prospects would remain \u201cdifficult, even with clearer federal guidance,\u201d Knab opined.<\/span><\/p>\n<div>\n<h3>Daily Debrief Newsletter<\/h3>\n<p>Start every day with the top news stories right now, plus original features, a podcast, videos and more.<\/p>\n<\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>In brief Galaxy Research says the Senate Banking draft embeds sweeping new illicit finance powers for the Treasury. The proposal [&hellip;]<\/p>","protected":false},"author":5,"featured_media":59295,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[220],"tags":[],"class_list":["post-59294","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tien-dien-tu"],"acf":[],"_links":{"self":[{"href":"https:\/\/hbbgroup.net\/vi\/wp-json\/wp\/v2\/posts\/59294","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hbbgroup.net\/vi\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hbbgroup.net\/vi\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hbbgroup.net\/vi\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/hbbgroup.net\/vi\/wp-json\/wp\/v2\/comments?post=59294"}],"version-history":[{"count":0,"href":"https:\/\/hbbgroup.net\/vi\/wp-json\/wp\/v2\/posts\/59294\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/hbbgroup.net\/vi\/wp-json\/wp\/v2\/media\/59295"}],"wp:attachment":[{"href":"https:\/\/hbbgroup.net\/vi\/wp-json\/wp\/v2\/media?parent=59294"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hbbgroup.net\/vi\/wp-json\/wp\/v2\/categories?post=59294"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hbbgroup.net\/vi\/wp-json\/wp\/v2\/tags?post=59294"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}