The US Senate Banking Committee’s new draft crypto bill grants sweeping new powers to the federal government. It marks the most significant expansion of the 2001 USA Patriot Act. 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. 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.
If passed, it would grant the Treasury Department sweeping new powers to freeze financial transactions, police decentralized 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. While the new draft bill carries bipartisan sponsorship, it is Senate Democrats who are driving the most aggressive provisions on illicit finance, Thorn said.
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. 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. Galaxy warns that this flips traditional legal due process on its head by prioritizing speed and disruption over judicial oversight.
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