The U.S. Treasury is urging Congress to consider a digital asset-specific "hold law." This proposal would enable crypto platforms to temporarily freeze funds linked to suspected illegal activity during investigations.
The recommendation appears in a Treasury report on tools to counter illicit finance involving digital assets, developed under the GENIUS Act. The measure aims to create a legal safe harbor for financial institutions to "temporarily and voluntarily hold digital assets involved in suspected illegal activity."
This authority could allow institutions to pause suspicious transfers before funds are moved or converted through other crypto services. Experts note that while exchanges can detect suspicious funds, a clear legal framework for holding them during investigations is often lacking. The proposed law could provide a defined window for platforms to pause funds while law enforcement navigates the legal process.
If adopted, this could strengthen how exchanges handle suspicious transactions, giving law enforcement more time to respond to the speed of blockchain transactions and enhance public-private partnerships. The move comes as Congress debates broader crypto market legislation.
While banks can delay suspicious transactions, this power is limited. For crypto exchanges, freezing funds without a clear legal safe harbor can lead to legal exposure. The Treasury's report aims to provide clear authority for platforms to pause assets during investigations, though questions remain regarding blockchain analytics reliability and transparency rules.