Last week, the Treasury Department finished receiving responses to a request for comments on “Innovative Methods To Detect Illicit Activity Involving Digital Assets.” It turns out I have such a thing in mind. It’s just a matter of weeks before the law enforcement dynamics around digital assets—and in general—change completely. I’m being wry.
A few months ago, I wrote in characteristically laudatory terms about the GENIUS Act. Still being wry! In my role as skunk at the garden party, I pointed out that GENIUS stablecoins will be “horrible on privacy.” I also sought to show how GENIUS doled out favors to select business sectors, guaranteeing that stablecoin holders will lose the benefits they could reap from digital currency.
The GENIUS Act also called for a study of “anti–money laundering innovation.” That, I said, is an understated admission that today’s financial surveillance policies are questionable.
Two years ago, I broached the idea of a system that would allow for law enforcement to query participants in financial transactions, obviating the need for wholesale financial surveillance. I have fleshed out that idea. Forthcoming in the Case Western Reserve University Journal of Law Technology and the Internet (Spring 2026)—available now on SSRN—is my article, “A Law Enforcement Paradigm for the New Form of Money.”
Here’s the background: Money has evolved over recent centuries from movements of tangible things to digital communications events. Over the last half-century, financial surveillance law has taken root. The product of the two trends is a comprehensive, global financial surveillance regime that has substantial costs in both dollar terms and in values such as privacy, free speech, and autonomy.
My article goes through how those costs appear to vastly outstrip the benefits of such surveillance. I rely heavily on superlative research from Ronald Pol, who has more evidence coming out soon to show the weakness of global financial surveillance.
In place of broad financial surveillance, I propose a system through which law enforcement agencies could query digital transactors for investigative purposes. In a communications channel parallel to private transaction channels, law enforcement requests could be transmitted selectively from anywhere on the globe to transactors anywhere else, inviting them to help suppress and punish criminal activity. Such a system would maintain or strengthen law enforcement capabilities while obviating the existing broad and costly financial surveillance regime.
Writing it was a fascinating and challenging tour through the social and criminological dimensions of a new technical system. You can decide for yourself how well I do as a sociologist and criminologist.
For many, this may be a daunting, heavily technical idea, too difficult to grok. A “communications channel parallel to private transaction channels”? What does that even mean? But the underlying idea is simple and traditional. As I write, “Where law enforcement need is shown, people should be able to participate in detecting wrongdoing and catching wrongdoers. The new law enforcement paradigm proposed here is the old law enforcement paradigm refitted for modern global networks.”
For some, that is contrary to the ethos of digital currency, which is to escape the oppressions of present-day surveillance-mongers. I agree with that instinct, but I’m also thinking down the horizon. Crypto users, I’m confident, don’t want their networks to be powerful and ready tools for ransom-takers, terrorists, child-abusers, and every other type of wrongdoer. They want privacy and a capacity for law enforcement and the community to prevent and punish genuine wrongdoing.
There are native political controls on the system I describe, which make it superior to the present status quo (which is the appropriate comparison):
Because a system for communicating law enforcement queries to global transactors would be “retail,” it would allow for political feedback loops that cause law enforcement practices and priorities to hew more closely to public values than the current “wholesale” financial surveillance system.
With that, we have a system that should meet with unanimous acclaim. The Treasury Department will no doubt adopt the system I describe upon reviewing my comment, shunning financial surveillance and dismantling both the Financial Crimes Enforcement Network, our domestic financial surveillance agency, and the Financial Action Task Force, which has pressed financial surveillance on countries around the world.
Any minute now. Yes, I’m still being wry.
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