Galaxy Research warned that a draft crypto market structure bill in the Senate could significantly expand US financial surveillance powers.
The firm said new Treasury authorities targeting decentralised finance could mark the biggest surveillance expansion since 2001.
The analysis focused on provisions allowing transaction holds without court orders and broader “special measure” powers over digital assets.
If enacted, this would represent the single largest expansion to financial surveillance authorities since the USA PATRIOT Act.
Alex Thorn said.
The comparison referred to the post-9/11 law that greatly widened federal monitoring and enforcement powers.
Galaxy said the Senate draft goes further on illicit finance controls than the House’s CLARITY Act.
The bill would allow law enforcement to request temporary pauses on digital asset transactions without court approval.
The proposal also includes liability protections for firms that comply with transaction freeze requests in good faith.
Galaxy said the measures could make it easier for service providers to halt funds quickly at the Treasury’s request.
The draft also introduces the concept of a “distributed ledger application layer” subject to sanctions and anti-money laundering rules.
Industry figures warned the debate highlights unresolved tensions between compliance requirements and user privacy.
Enterprises and institutions need confidentiality, while regulators need auditability.
Rob Viglione said.
He warned against treating crypto infrastructure as a surveillance tool rather than enabling controlled disclosure.
Some executives said regulatory ambiguity continues to limit real-world business adoption of on-chain payments.
Until those contradictions are addressed, prospects for businesses remain difficult.
Megan Knab said.