🧵Treasury RFC + zeroShadow’s Response (1/9) In Aug 2025, the U.S. Treasury issued a Request for Comment (RFC) on innovative ways to detect illicit activity in digital assets. This comes from the GENIUS Act, which built a federal stablecoin framework and directed Treasury to explore new AML/CFT tools.

Treasury wants input on how to use: 🤖AI 🪪Digital identity ⚡️APIs 🔎 Blockchain monitoring 🔐Privacy-enhancing tech… to stop laundering, ransomware, fraud, sanctions evasion & more. Deadline: 17 Oct 2025.

From our work tracing stolen funds across mixers, cross-chain bridges, and exchanges, zeroShadow flagged key risks: 1) Obfuscation is now industrialized — with mixers, privacy coins & rapid chain-hopping. 2) Illicit finance moves across multiple blockchains, making single-chain analytics insufficient. 3) Current compliance tools often flood firms with alerts, but miss deeper attribution.

We also raised structural challenges: - Collaboration gaps: Investigators, exchanges, and regulators operate in silos. - Access barriers: Sharing data with investigative firms is rare without legal clarity. - Resource strain: Smaller institutions struggle to integrate costly or complex new tech.

Our recommendations included: 1) Safe-harbor data sharing agreements so exchanges & investigators can collaborate lawfully. 2) Pilot programs pairing investigators with exchanges/stablecoin issuers for real-time freezes. 3) Compliance tools should focus on efficiency — reducing noise while increasing precision.

Alongside these, zeroShadow highlighted its real-time API product as a practical solution: ⚡️A live feed of high-risk crypto addresses (sanctions, thefts, scams, active cases). 🔁Updated by investigators 24/7, not just static algorithms. 🧩Software-agnostic — plugs into existing compliance stacks. 🤝Free for law enforcement, regulators & key partner institutions.

The API isn’t meant to replace existing compliance tools — but to augment them with sharper signals and faster attribution. The goal: help institutions catch illicit flows as they move, not days later.

Our core message: detecting illicit finance requires public-private collaboration. 🔎Investigators bring real-world tracing expertise. 🏛️Government enforces policy. 💱Exchanges control the choke points. Only by combining these roles can the ecosystem stay secure.