The new draft crypto market structure bill marks the most significant expansion of government financial surveillance power since the 2001 USA Patriot Act, warns Galaxy research head Alex Thorn.
If passed, it would grant the Treasury Department sweeping new powers to freeze financial transactions, police decentralised finance protocols, and pressure crypto activity outside of America’s jurisdiction.
“All of this adds up to major victories for senators seeking additional curbs on illicit finance,” Thorn said in a note shared with DL News. “They have achieved substantial expansions of government surveillance and enforcement capabilities.”
The bill comes as President Donald Trump has pledged to usher in a “new American Golden Age” by bringing digital assets onshore, modernising market infrastructure, and boosting the country’s position in crypto.
Treasury Secretary Scott Bessent has made crypto a priority for his department and issued new guidance in November.
Senate Democrats want more
While the new draft bill carries bipartisan sponsorship, it is Senate Democrats who are driving the most aggressive provisions on illicit finance, Thorn said.
And they are pushing for even more government oversight powers, Thorn said.
“Some senators are still calling for additional illicit activity provisions, or enhancements of the provisions already in the draft,” Thorn said.
“These requests seem to ignore the fact that they’ve already achieved a historic expansion of financial surveillance and enforcement authorities, likely the largest since the enactment of the USA Patriot Act in 2001,” he said.
It is not the first crypto clash between Democrats and Republicans.
Tim Scott, a Republican Senator for South Carolina and chair of the Senate Banking Committee, told Fox Business in November that passage of the Clarity Act, a key piece of regulatory framework, has been hamstrung by Senate Democrats.
“The Democrats have been stalling and stalling and stalling because they don’t want President Trump to make America the crypto capital of the world,” Scott said.
The Clarity Act is scheduled for a vote in the Senate Banking Committee on Thursday.
Patriot Act 2.0?
Galaxy’s report draws an explicit parallel to the vast powers granted by the 2001 USA Patriot Act passed immediately in the aftermath of the September 11 terrorist attacks.
The new draft bill amends the same legal framework — Section 311 of the Bank Secrecy Act — that empowered the Treasury Department to isolate foreign banks after September 11.
Lawmakers have now added specific digital assets to that capabilities toolkit, enabling Treasury to designate crypto transactions, protocols, or jurisdictions as primary money-laundering concerns and restrict them accordingly.
They include the addition of a new “temporary hold” authority. Under the draft, the Treasury and other agencies can instruct stablecoin issuers and crypto intermediaries to freeze transactions for up to 30 days without a court order. Firms that comply would receive legal immunity via a “safe harbour” provision.
Galaxy warns that this flips traditional legal due process on its head by prioritising speed and disruption over judicial oversight.
Crypto market movers
- Bitcoin is up 2.8% over the past 24 hours, trading at $95,024.
- Ethereum is up 6.1% past 24 hours at $3,329.
What we’re reading
- Crypto decries stablecoin change in Senate market structure bill — DL News
- BNB Chain to get 40% speed boost in upcoming Fermi upgrade — DL News
- Crypto coin firm touted by Eric Adams denies allegations of ‘rug pull’ scam — The Guardian
- French regulator says some crypto firms unresponsive as EU licence deadline approaches — Yahoo Finance
- Michael Saylor slams interviewer for questioning Bitcoin treasury model: ‘Ignorant and offensive’ — DL News
Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email at lance@dlnews.com.
