Fragmented Enforcement and Power Struggles of the US Federal Regulatory Framework: An Empirical Study
The evolution of US crypto policy in 2025 will not be linear. Although the Trump 2.0 administration has sent strong signals at the executive level, in legislative practice, the struggle over "liquidity sovereignty" has entered a period of negotiation over technical details.
The “Balance Sheet” of Administrative Power: The Path to a National Reserve of 200,000 Bitcoins
The digital asset executive order issued in January 2025 fundamentally changed the U.S. Treasury Department's definition of on-chain assets.
Micro-level operation of strategic reserves: The executive order signed in March required the Treasury Department to formally transfer approximately 200,000 bitcoins previously seized in the Silk Road and Bitfinex cases to the "Digital Asset Vault".
Legal characterization: Bitcoin is no longer considered "proceeds of crime" to be disposed of, but is defined as a "sovereign liquidity hedging tool." This shift directly led to at least 12 sovereign wealth funds worldwide beginning to explore micro-pathways for incorporating crypto assets into their balance sheets in the second half of 2025.
The GENIUS Act: Federal Clearing Practices for Payment-Based Stablecoins
The GENIUS Act (Guidance and Establish National Innovation for US Stablecoins Act), which was signed into law on July 18, 2025, established the first federal stablecoin framework.
The hard constraint of "100% high-quality liquidity" for reserve assets
Section 210 of the bill explicitly stipulates that federally licensed issuers must allocate reserves to cash, short-term U.S. Treasury securities with maturities of less than 90 days, and the Federal Reserve's overnight repurchase agreements.
Structural support for the US Treasury market: As of December 2025, Circle and Tether held over $240 billion in short-term US Treasury bonds. In the November Treasury auction, the portfolio adjustments of these issuers were included for the first time in the Federal Reserve's Financial Stability Report, demonstrating that stablecoins have become an integral part of the sovereign clearing mechanism.
Excluding Securities Status: The bill formally establishes that payment-type stablecoins are not classified as securities. This directly led to a shift in the reporting treatment of such asset custody businesses by traditional institutions like Bank of New York Mellon in Q3 2025, moving from "asset deduction" to "regular balance sheet item".
Technical barriers to entry for Federal Reserve Master Accounts
The bill allows non-bank institutions to apply for a Federal Reserve master account to access the FedNow system.
Empirical stress test case: In October 2025, the first three applicant institutions faced a stringent "instant liquidation stress test." The audit revealed that despite having 1:1 reserves, under extreme redemption pressure, their liquidation instruction submission delays exceeded the technical threshold of 200 milliseconds. This failure to meet this micro-technical metric resulted in the actual rollout of federal licenses at the end of 2025 being slower than market expectations.
The Clarity Act: A Technical Impasse in Jurisdiction Delineation
Although the bill passed the House of Representatives in July, it stalled before the Senate Banking Committee by the end of 2025.
The 20% rule in determining a "mature blockchain"
The bill introduces a quantitative decentralized assessment model: if any affiliated group holds more than 20% of the circulating supply of tokens, the asset is regulated by the SEC; otherwise, the digital commodity spot market is regulated by the CFTC.
Structural Restructuring of Project Governance: A survey of 150 mainstream DAOs in September 2025 showed that approximately 35% of projects had urgently passed "treasury burn" proposals in Q3. The underlying intention was to artificially reduce the holdings of the top 10 addresses, attempting to bring themselves under CFTC regulation before the Senate vote in 2026, thus circumventing high securities compliance costs.
The real crux of the Senate battle: The hearing minutes from January 14, 2026, reveal that the core of the Senate's delay in voting lay in "yield distribution." Bank lobbying groups argued that allowing non-bank entities to distribute yields through DeFi protocols would trigger a massive exodus of commercial bank deposits.
FinCEN's "Priority Management": Two-Year Extension of Investment Advisory AML Rules
On January 14, 2026, FinCEN announced that it would postpone the effective date of the investment advisor anti-money laundering rules to 2028.
Compliance Cost Analysis: Research shows that for a mid-sized hedge fund to establish a system compliant with BSA standards, the compliance cost in the first year will reach $1.2 million to $2 million.
A shift in risk priorities: Under Secretary of the Treasury Michael Faulkender explicitly stated that regulation is focusing on "national security priorities and areas of highest risk." This signifies a return to pragmatism in US regulatory thinking by the end of 2025, moving from a "whole-chain review" to "defense against highly liquid shadow nodes."
The "Industrialization" of Criminal Pathways: Empirical Evidence of North Korean Hackers' Money Laundering Cycles and Shadow Finance
Looking back at the crime data of 2025 from the beginning of 2026, the most significant micro-level feature is the shift in attack methods from "finding technical vulnerabilities" to "hunting for administrative privileges".
Empirical Evidence on the Standardization of Money Laundering Cycles by North Korean Hackers: A 45-Day Rhythm Analysis
In 2025, North Korean hackers (primarily the Lazarus Group) exhibited a strong statistical pattern in their disposal of stolen funds.
The shift towards access control at attack points: A retrospective of the $1.5 billion Bybit case
Hackers are no longer looking for contract vulnerabilities; instead, they are using social engineering to gain access to people.
Impersonating recruiters and intercepting SSO: Hackers posing as recruiters from top AI companies lure victim executives into participating in "technical screenings" and use malicious code to intercept victims' VPN credentials or single sign-on (SSO) access.
Empirical results: In the first quarter of 2025, losses caused by such intrusions into private key infrastructure accounted for 88% of the total losses across the industry.
Timeline distribution of a 45-day "standardized money laundering path"
Once the asset transfer is successful, North Korean hackers will initiate the following procedures:
T+1 to T+7 (Liquidity Swap): The flow of stolen funds into DeFi protocols surged by 370%. Hackers used permissionless liquidity on DEXs to exchange stolen coins for USDT/USDC, which then entered the first-level mixer.
T+8 to T+21 (Cross-chain decentralization and path fingerprinting): Large-scale utilization of cross-chain bridge services (such as XMRt, with a 141% increase in traffic). Empirical data shows that during this stage, hackers tend to split funds into small increments of less than $500,000 for transfer, aiming to evade the "large transaction monitoring" threshold of compliance software.
T+22 to T+45 (Exit through specific channels): Money laundering enters its final stage, focusing on specific Chinese-language money laundering guarantee services (such as Tudou Danbao and Huiwang). Tudou Danbao's share of illicit transactions surged by 1753% in 2025.
Micro-evolution of VASP access mechanisms and empirical analysis of compliance costs and benefits in various jurisdictions
By 2025, the regulatory granularity of global VASPs will begin to be quantified down to specific figures for paid-in capital, audit frequency, and reserve liquidity tiers.
Brazil: An Empirical Analysis of Industry Consolidation Driven by "Capital-Heavy" Industries
In November 2025, the Central Bank of Brazil (BCB) issued Resolution No. 519-521, marking the entry of the South American cryptocurrency market into a "bank-level" regulatory phase. This resolution is not merely an authorization mechanism, but rather a micro-level cleansing of the existing market through extremely high financial constraints.
The micro-level logic behind setting the capital threshold: Brazil requires VASPs to have a minimum paid-up capital of BRL 10.8M to BRL 37.2M (approximately US$2 million to US$6.9 million). This figure is not randomly set, but is a "risk reserve" calculated based on the VASP's risk exposure to illicit funds in 2024.
Empirical evidence of the exit of existing institutions: As of the end of December 2025, approximately 42% of small and medium-sized non-standard platforms in Brazil announced the cessation of operations due to their inability to complete capital replenishment by the early 2026 deadline. This "capital-intensive" strategy has achieved de facto industry consolidation, forcibly guiding liquidity to compliant entities with banking backgrounds.
Taxation and exchange rate intervention in cross-border payments: In the second half of 2025, Brazil began to implement micro-taxes on cross-border payments using stablecoins, which increased the cost of illicit offshore fund transfers by about 4.5%, forcing many P2P businesses to shift to regulated instant payment systems.
Hong Kong: The Construction of a Ladder Between Stablecoin Redemption Time and Underlying Asset Liquidity
In August 2025, the Hong Kong Monetary Authority (HKMA) implemented a regulatory regime for stablecoin issuers, shifting the focus of regulation from simple reserve ratios to the more micro-level "liquidity redemption protection".
The "one-business-day redemption" requirement: Licensed issuers must demonstrate their ability to redeem at par value within one business day. To meet this requirement, issuers must establish an extremely sophisticated liquidity ladder.
Shifts in Reserve Allocation: A survey conducted at the end of 2025 revealed that stablecoin issuers with Hong Kong licenses increased the proportion of cash and overnight repo (O/N Repo) in their reserves to over 25% of the total. This stringent requirement for the quality of underlying assets, while compressing issuers' profit margins, also demonstrated the high defensive capabilities of Hong Kong-issued stablecoins during the volatility in the US Treasury market in November, successfully attracting institutional funds from Southeast Asia.
Kazakhstan: Cross-regional institutional design of the Digital Financial Assets (DFA) Banking Law
The amendments to Kazakhstan's Banking Law, which officially came into effect on January 17, 2026, are actually based on a series of intensive technology pilot programs conducted throughout 2025 at the Astana International Financial Centre (AIFC).
The DFA's three-tier classification system: This law categorizes crypto assets into fiat-backed (stablecoins), asset-backed (tokenized commodities), and electronic financial instruments.
The "risk-free" constraint on reserves: The law mandates a 1:1 ratio of reserves held in designated secondary bank custody accounts, and strictly prohibits the use of reserves for any investment activities (including government bonds). This design reflects Central Asian countries' micro-level vigilance regarding the potential for on-chain liquidity to trigger runs on traditional banks.
Banking Integration Practices: This law authorizes commercial banks to hold up to 100% ownership of fintech subsidiaries for conducting crypto asset custody and payment businesses. Halyk Bank's establishment of Halyk Digital in December 2025 marks the formal integration of on-chain assets into sovereign-level clearing accounts.
Empirical Empirical Study of the Penetration-Based Audit of VASP Nesting Risk
In 2025, the "nested risks" between VASPs became a major area of concern for compliant software development and regulatory inspections.
Behavioral characteristics of shared wallets (Omnibus Wallets): Many unlicensed micro-nodes use the compliance guise of shared wallets of large, compliant exchanges to conduct high-frequency transfers.
Empirical Evidence of Shadow Node Identification: In the Bybit incident review, technicians analyzed transaction flows throughout 2025 and identified 28 "shadow nodes" specifically handling high-risk illicit traffic from the public traffic of compliant VASPs. These nodes exhibited a specific "high-frequency diversion" pattern, with fund inflows and outflows typically less than 3 seconds, and displayed typical structured money laundering characteristics.
Empirical Evidence of the Confrontation Between Public Health, Dark Web Dynamics, and Geopolitical "Pressure Relief Valves"
In 2025, geopolitical conflicts and a public health crisis officially reshaped the crypto space from an "alternative asset" into "sovereign-grade financial infrastructure." Perpetrators demonstrated remarkable technological resilience that year.
The structural reorganization of dark web markets (DNM): From Abacus to TorZon
In 2025, the total inflow of funds into the dark web market approached $2.6 billion. Despite frequent law enforcement crackdowns, crypto-driven drug trafficking has shown remarkable resilience.
Abacus Market's "Exit Scam": In July 2025, Abacus Market, which dominated the Western dark web market, suddenly went offline, with the administrator absconding with funds under the guise of a DDoS attack.
Liquidity Migration and the Rise of TorZon: Within 30 days of Abacus's shutdown, traffic rapidly flowed to TorZon. This "inter-market replenishment" and "post-disaster migration" pattern demonstrates that DNM has evolved into a highly globalized supply network, where the shutdown of a single node can only trigger a very short-term pause.
The transformation of Fraud Shops: Fraud Shop activity declined year-on-year in 2025, driven by law enforcement pressure and the popularization of compliant escrow payment tools; while Chinese Fraud Shops showed a trend of consolidation towards high-value, wholesale models.
"On-chain early warning" in the fentanyl supply chain and empirical evidence of health risks
2025 marks a turning point for blockchain data in supporting public health. On-chain monitoring revealed a significant decrease in fentanyl precursor-related funding flows in 2025, a trend that is significantly positively correlated with a decline in opioid interception and deaths.
Early warning signs: Fluctuations in on-chain data typically precede public health statistics 3-6 months later, bringing blockchain analytics tools into the decision-making purview of health agencies in various countries.
Transaction Amount and Health Correlation Analysis: Micro-analysis based on Canadian public health data shows that the size of encrypted transaction amounts directly impacts health consequences: large encrypted drug purchases (typically representing wholesale or high-frequency use) are positively correlated with negative health consequences, while small transactions show no significant association. This provides law enforcement agencies with micro-priority guidance for "targeted elimination of high-risk procurement nodes."
On-chain projection of geopolitics: Empirical evidence of liquidation networks for sovereign actors
In 2025, actors such as Russia, Iran, and Venezuela established a clearing loop on the blockchain that is completely independent of the dollar system.
Empirical analysis of the shadow stablecoin A7A5: The Russian ruble-pegged stablecoin A7A5 processed over $72 billion in transactions in 2025.
Non-USD Clearing Loop: A7A5 is more than just a token; it's a core medium connecting entities sanctioned by Russia with illicit financial services (such as Chinese-language escrow services) in the Asia-Pacific and Middle East. The A7 wallet cluster behind it has linked at least $38 billion in transactions, demonstrating its deep integration into specific shadow banking systems.
Venezuela: Empirical Evidence of Dual-use Rails: In December 2025, the US seizure of oil tankers involved in sanctions circumvention revealed that Venezuela had begun large-scale use of encrypted rails for energy settlement.
The intersection of livelihood and sanctions: Encryption facilities in Venezuela support legitimate remittances from overseas residents, but also serve as a national-level clearing tool to bypass the international banking system. This "dual-purpose" nature makes the enforcement of sanctions against the region extremely difficult to identify at the micro level.
Liquidity Capture: A Fundamental Reconstruction of Risk Quantification
In 2025, a new, highly granular indicator was introduced in the field of anti-money laundering – “liquidity capture”.
Metric definition: This metric measures how much “deployable capital” an illicit entity captures, rather than simply the number of transactions.
Empirical data: Although illicit transactions accounted for only 1.2% of the total, illicit entities captured 2.7% of the available liquidity on-chain in 2025.
Micro-level conclusion: Illicit funds are far more active and circulate faster on the blockchain than ordinary assets. Traditional monitoring software, by focusing excessively on "transaction counts," ignores the substantial extent to which this active capital pollutes the financial system. The regulatory focus in 2026 will shift entirely to this "liquidity penetration."
The Technological Evolution of Regulatory Technology: An Empirical Analysis of Real-Time Asset Fingerprint Attribution and Global Intelligence Alignment
The core evolution of anti-money laundering technology by 2025 will be reflected in the deep extraction and real-time attribution of dynamic asset fingerprints. Due to the increasing operational complexity of state-sponsored attacks and large-scale shadow clearing networks, traditional monitoring methods based on static address tags have shown significant limitations in identifying highly concealed fund flows. Therefore, the focus of technology development is shifting towards multi-dimensional behavioral pattern analysis and low-latency response architectures.
Practical Application of Asset Fingerprint Extraction and Deanonymization Technology
In response to coin mixing protocols and complex transaction paths, anti-money laundering software began to widely adopt probabilistic attribution models for monitoring in 2025.
Technical parameters of the probabilistic attribution model: This model analyzes the retention behavior of specific amounts of funds (e.g., single transactions exceeding 100 ETH) after entering a liquidity pool. Specific parameters include the time difference between deposits and withdrawals, the asset splitting and combination patterns, and specific gas fee characteristics generated during transaction execution. These data points collectively constitute a unique asset fingerprint, used to achieve logical tracing and alignment in the absence of direct links.
Improved confidence in identification data: Monitoring data from December 2025 shows that for money laundering pathways where the time spent in complex protocols is less than 48 hours and the monetary characteristics are highly overlapping, the identification accuracy provided by real-time attribution technology has increased from about 60% in 2024 to over 92%. This improvement in accuracy directly weakens the effectiveness of concealing the source of funds through high-frequency, small-amount transactions.
Beacon Network: An Analysis of the Effectiveness of Real-Time Global Intelligence Synchronization
By 2025, Beacon Network will cover approximately 75% of global virtual asset service provider transaction traffic. The system's core function is to eliminate intelligence lags between law enforcement agencies in different jurisdictions.
Physical latency in intelligence exchange: When a specific risky node attempts to convert assets into fiat currency in Latin America, compliance systems located in Asia or North America can synchronize the node's risk weight within 300 milliseconds. This improved efficiency means that restrictions on illicit funds are no longer hampered by geographical location or different jurisdictional office hours.
Empirical evidence: In a large-scale protocol attack in September 2025, the system detected a warning signal triggered by behavioral signatures 18 hours before the malicious code was executed. This large-scale implementation of preventative risk management allows law enforcement agencies to intervene early and prevent subsequent asset transfers.
In-depth thinking: The generational leap from "rule-based governance" to "algorithmic game theory"
Looking at the on-chain data from the beginning of 2026, the focus of anti-money laundering efforts has shifted significantly from address tagging to asset fingerprinting. The successful capture of 2.7% of available liquid capital on-chain by illicit entities in 2025 demonstrates that traditional transaction volume analysis cannot capture the true depth of shadow finance networks' penetration into the ecosystem.
The final empirical analysis points to a specific technological trend: the effectiveness of anti-money laundering will depend on the ability to block the speed at which illicit entities utilize available capital. When blockchain data in 2025 can reflect changes in drug interception before public health statistics do, this data infrastructure will have already transcended the scope of financial regulation. The core competition in 2026 will revolve around how to extract deeper asset fingerprints at a lower cost and, through real-time path attribution, shift from retrospective data storage to low-latency automated intervention at the transaction execution layer during illicit funds' attempts to access liquidity nodes.
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TrustIn is an anti-money laundering (AML) infrastructure for stablecoins (USDT/USDC) serving the global market.
We offer a "white-box" risk control engine covering major global public blockchains. It not only supports real-time screening of global sanctions lists (such as OFAC), but also has deeper data insights into complex transaction networks (underground intelligence addresses), helping you avoid "false positives" in your global business and ensuring the safe flow of funds.
