Galaxy Warns Senate Crypto Bill Could Grant US Treasury Sweeping Surveillance Powers
is worried about a draft bill from the US Senate Banking Committee that will change the structure of the crypto market. They say that the bill’s features would give the Treasury Department much more power to monitor and enforce laws in the digital asset industry.
The company wrote in a research note on January 14, 2026, that the idea might give the government the most ability to overview finances since the USA PATRIOT Act of 2001. Galaxy stressed that the Senate draft is much more than the House-passed , especially when it comes to fighting illegal money.
significant Parts: Concerns About Fuel
The main point of Galaxy’s criticism is a new “special measures” power for cryptocurrencies under Section 311 of the Bank Secrecy Act. This would give the Treasury the right to name foreign jurisdictions, financial organisations, or types of digital asset transactions as major . This would let them put limits or conditions on some crypto fund transfers.
The proposal also adds a “temporary hold” feature that allows the Treasury or other authorities to ask stablecoin issuers and digital asset service providers to freeze transactions for up to 30 days, with the option to extend the freeze without a court order beforehand.
More rules focus on “distributed ledger application layers,” such as web-hosted interfaces for blockchains or decentralised finance protocols. The measure directs the Treasury to issue instructions requiring these front ends to check wallets, restrict illegal conduct, and use risk-based controls.
Galaxy also discussed the rules that “DeFi in name only” protocols had to follow, meaning controllers would have to comply with the Bank Secrecy Act.
A Direct Warning from Galaxy
Galaxy Alex Thorn, head of Firmwide Research, pointed out in the memo how large the suggested changes would be.
“Overall, we think that if the powers in the Senate Banking draft became law, they would be the largegest increase in financial surveillance powers since the USA PATRIOT Act,” Thorn wrote. He said that the Senate version “includes substantially enhanced financial surveillance authorities to combat illicit finance,” which is diverse from the House CLARITY Act.
Reactions From the Industry and the largeger Picture
The Senate Banking Committee’s proposal comes as talks continue to move forward with a full law.
Galaxy warned that tough measures against illegal finance could overshadow these improvements, even while the bill includes things that the industry likes, such as protecting developers, making it clear what a money transmitter means, and defining the regulatory authorities between agencies.
The Crypto Council for Innovation praised the draft as proof that policymakers are still working on key issues. They stressed the importance of maintaining competition and consumer choice.
The Senate Agriculture Committee has pushed its markup to late January to secure support from both parties. Galaxy’s study shows that some lawmakers still want even harsher enforcement provisions.
What This Means For Crypto Innovation
Galaxy’s warning makes it clear that the bill’s current shape might put privacy, innovation, and global crypto activity at risk. The company compares the plan to the PATRIOT Act, which gave the government more tools to spy on people later than 9/11.
They say the proposal could enable the government to monitor and intervene in large-scale digital asset transactions, which could scare people away from using them and move activities overseas.
As congressional committees work on the bill, the major issue is still how to strike a balance between strong protections against illegal finance and encouraging a competitive . Before any possible committee votes and floor action, industry participants will keep a close eye on developments.
