U.S. Treasury Proposes Digital ID Integration for DeFi, Sparks Regulatory Debate

The U.S. Treasury is taking a significant step towards regulating decentralized finance (DeFi) by proposing digital identity checks in smart contracts under the GENIUS Act. This initiative aims to deter illegal financial activities and reduce money laundering risks within the DeFi ecosystem. Public feedback on this proposal closes on October 17, 2025. The potential impact of these regulatory changes is significant, potentially affecting stablecoin systems and leading to substantial shifts in DeFi compliance norms.