The Aleo Network Foundation Responds to Treasury's RFC on Innovative Methods to Detect Illicit Activity Involving Digital Assets

The U.S. Department of the Treasury, through its Office of Strategic Policy, Terrorist Financing and Financial Crimes, published a Request for Comment (RFC) seeking input on innovative methods to detect illicit activity involving digital assets. This request fulfills regulatory obligations under the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), which aims to establish U.S. leadership in the global payment stablecoin ecosystem.

Aleo's response focuses specifically on Question 6 of the RFC, addressing how cryptographic protocols and privacy-enhancing tools—particularly zero-knowledge proofs—can be used by financial institutions to detect illicit activity and mitigate illicit finance risks. The Foundation's submission highlights three key technologies: zPass (decentralized identity credentials), ViewKey (selective disclosure tools for compliance), and ARC-100 (best practices for cross-chain bridge operations), demonstrating how privacy-preserving infrastructure can support both robust user privacy and effective risk management in the emerging on-chain financial ecosystem.

You can find Aleo's full response below, or by accessing this link.