U.S. Treasury proposes giving crypto platforms the power to freeze suspicious funds

Key points:

• The U.S. Treasury has proposed a law allowing the temporary blocking of suspicious crypto transactions.
• Platforms would be able to hold funds during investigations.
• The initiative is being discussed within the framework of the GENIUS stablecoin legislation.

The U.S. Department of the Treasury has proposed that Congress consider a special law allowing crypto platforms to temporarily block suspicious digital assets. The proposal refers to a so-called “hold law” — a mechanism that would allow transactions to be paused during investigations.

The initiative is outlined in a Treasury report on technologies used to combat financial crime involving digital assets, prepared under the GENIUS Act regulating the stablecoin market.

Under the proposal, crypto platforms would be able to temporarily hold assets if there is suspicion that they are linked to illegal activity. The measure is intended to give law enforcement time to obtain the necessary court warrants and prevent funds from being moved through other services.

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Why authorities consider the measure necessary

According to experts, crypto exchanges are already capable of identifying suspicious transactions using blockchain analytics, but they do not always have clear legal grounds to temporarily freeze funds.

At present, platforms often face a difficult choice: allow a transfer to proceed or freeze the funds while risking legal consequences. The proposed law aims to create a legal framework that would allow assets to be temporarily held until a review is completed.

At the same time, legal experts point to potential legal complications. For example, transparency rules may require notifying users when their funds are frozen, while suspicious activity reporting regulations prohibit disclosing details of an investigation. This could create legal uncertainty.

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Nevertheless, supporters of the initiative believe that such a mechanism would help authorities respond more quickly to fraud and money laundering, since cryptocurrency transactions move significantly faster than traditional bank transfers.