The GENIUS Act and Federal Cryptocurrency Investigations: What You Need to Know

The federal government’s approach to cryptocurrency has changed significantly with the passage of the GENIUS Act, a federal law establishing a regulatory framework for payment stablecoins in the United States.

For cryptocurrency companies, investors, executives, and individuals who use digital assets, the new law is about more than financial regulation. Increased regulation can also mean increased federal scrutiny, additional financial records, and new avenues for government investigations involving cryptocurrency transactions.

If you are facing a federal cryptocurrency investigation, have received a subpoena, or believe federal agents are investigating transactions involving stablecoins or other digital assets, understanding this changing regulatory environment is important.

What Is the GENIUS Act?

The Guiding and Establishing National Innovation for U.S. Stablecoins Act, commonly called the GENIUS Act, was signed into law on July 18, 2025.

The law establishes a federal framework governing payment stablecoins—digital assets generally designed to maintain a stable value by reference to the U.S. dollar or another monetary value.

Among other requirements, the GENIUS Act regulates who may issue payment stablecoins, establishes reserve and disclosure requirements, and incorporates permitted stablecoin issuers into federal anti-money-laundering and financial-compliance regimes.

While the law is primarily regulatory, its requirements may also have important consequences in federal criminal investigations involving cryptocurrency.

Does the GENIUS Act Make Cryptocurrency Illegal?

No.

The GENIUS Act does not make cryptocurrency or stablecoins illegal, nor does it make ordinary cryptocurrency transactions criminal.

Instead, the Act creates rules governing payment stablecoin issuers and establishes federal and state regulatory requirements for those businesses.

That distinction is important. The use of Bitcoin, Ethereum, stablecoins, or other digital assets does not by itself demonstrate criminal activity.

Nevertheless, cryptocurrency transactions can become evidence in federal investigations involving alleged fraud, money laundering, sanctions violations, narcotics offenses, tax crimes, or illegal money transmission.

How Could the GENIUS Act Affect Federal Cryptocurrency Investigations?

One significant feature of the GENIUS Act is its relationship with the Bank Secrecy Act and federal anti-money-laundering laws.

Permitted payment stablecoin issuers are treated as financial institutions for purposes of the Bank Secrecy Act and are subject to anti-money-laundering and sanctions compliance obligations.

As federal regulators implement these requirements, stablecoin issuers may maintain significant information concerning customers and transactions.

That information can potentially become relevant to a federal investigation.

Depending on the circumstances, investigators may seek information through subpoenas, search warrants, court orders, or other legal process. Federal agencies may also use blockchain analytics to follow transactions between cryptocurrency wallets and combine that information with records obtained from cryptocurrency exchanges, banks, stablecoin issuers, and other financial institutions.

Can Federal Agents Trace Stablecoin and Cryptocurrency Transactions?

In many cases, yes.

A common misconception is that cryptocurrency transactions are necessarily anonymous. Many blockchain transactions are recorded on public ledgers that preserve a permanent history of transfers between wallet addresses.

The more difficult issue is often determining who controls a particular wallet.

Federal investigators may attempt to connect a cryptocurrency wallet to a particular individual through exchange records, banking information, IP information, electronic devices, communications, Know Your Customer records, or other evidence.

The government may then attempt to reconstruct the movement of funds across multiple wallets and exchanges.

But tracing cryptocurrency is not the same thing as proving a federal crime.

In a criminal case, important questions may remain concerning who actually controlled a wallet, who authorized a transaction, what the person knew, and whether the government can prove the required criminal intent.

What Federal Crimes Can Involve Cryptocurrency or Stablecoins?

Cryptocurrency investigations can involve numerous federal criminal statutes. Depending on the allegations, prosecutors may investigate offenses including:

• Money laundering
• Wire fraud
• Bank fraud
• Securities or commodities fraud
• Conspiracy
• Operating an unlicensed money transmitting business
• Bank Secrecy Act violations
• Economic sanctions violations
• Tax offenses
• Narcotics-related money laundering
• Forfeiture of cryptocurrency and other digital assets

The existence of cryptocurrency transactions does not establish that any of these crimes occurred. Federal prosecutors must still prove the elements of the particular offense charged.

Cryptocurrency and Federal Money Laundering Investigations

Money laundering is one area in which cryptocurrency transactions frequently receive significant scrutiny.

Federal investigators may examine whether digital assets were used to conceal the source, ownership, location, or movement of funds allegedly connected to criminal activity.

These investigations can become extremely complicated.

Funds may move through multiple wallets, exchanges, stablecoins, decentralized protocols, or different blockchain networks. The government may rely on blockchain-analysis software to reconstruct those transactions.

A defense investigation may therefore require careful examination of the government’s blockchain analysis, the attribution of particular wallets, the underlying financial transactions, and the evidence concerning the client’s knowledge and intent.

Can Cryptocurrency Be Seized by the Federal Government?

Yes. Federal authorities may seek to seize cryptocurrency when they contend that the digital assets constitute proceeds of criminal activity, were involved in money laundering, or are otherwise subject to federal forfeiture laws.

Cryptocurrency seizures can occur during an investigation or after criminal charges have been filed.

The government may seek forfeiture of Bitcoin, stablecoins, other cryptocurrency, bank accounts, real estate, vehicles, or other property allegedly connected to an offense.

Importantly, a seizure does not necessarily mean that the government ultimately has the right to keep the property. Depending on the circumstances, there may be legal procedures available to challenge a seizure or forfeiture.

What Should You Do If You Receive a Federal Cryptocurrency Subpoena?

Receiving a grand jury subpoena, target letter, search warrant, or contact from a federal agent should be taken seriously.

A person who learns of a federal cryptocurrency investigation should consider speaking with an experienced federal criminal defense attorney before communicating with investigators.

Statements made during the early stages of an investigation can become significant later. Even someone who believes they have done nothing wrong can create additional problems by making inaccurate, incomplete, or misunderstood statements to federal agents.

An attorney can evaluate the investigation, communicate with prosecutors or agents when appropriate, determine whether the client may be considered a witness, subject, or target, and begin preserving and reviewing relevant evidence. We are here to help. Contact us now.

Which Federal Agencies Investigate Cryptocurrency Crimes?

Depending on the allegations, cryptocurrency investigations may involve agencies including the Federal Bureau of Investigation (FBI), Internal Revenue Service Criminal Investigation (IRS-CI), Drug Enforcement Administration (DEA), Department of Homeland Security, U.S. Secret Service, Department of Justice, Financial Crimes Enforcement Network (FinCEN), or other federal agencies and regulatory authorities.

Some investigations involve multiple agencies working through a federal task force.

Because cryptocurrency can cross state and international borders quickly, federal jurisdiction may become an important part of these cases.

The GENIUS Act May Mean Greater Regulatory Scrutiny

The GENIUS Act represents an important development in the federal regulation of digital assets.

For legitimate cryptocurrency businesses and users, greater regulatory clarity may provide significant benefits. At the same time, a more developed regulatory system can produce additional compliance requirements, transaction records, reporting obligations, and government oversight.

Those developments may become particularly important when federal prosecutors investigate alleged money laundering, fraud, illegal money transmission, sanctions violations, or other financial crimes involving digital assets.

Facing a Federal Cryptocurrency Investigation?

Federal cryptocurrency cases can combine complicated criminal statutes with highly technical blockchain evidence.

If you have received a federal grand jury subpoena, target letter, search warrant, or request for an interview, or if cryptocurrency has been seized by federal authorities, obtaining legal advice early in the investigation can be critical.

Conaway & Strickler, P.C. represents individuals facing serious federal criminal investigations and prosecutions. Our attorneys can evaluate the government’s allegations, examine the financial and digital evidence, and develop a defense strategy based on the specific facts of the case.

If you are under investigation for an alleged federal offense involving cryptocurrency, stablecoins, money laundering, fraud, or digital assets, contact Conaway & Strickler, P.C. to discuss your case.

This article is provided for general informational purposes only and does not constitute legal advice. Reading this article or contacting the firm does not create an attorney-client relationship.