Treasury urges ‘hold law’ to let crypto platforms temporarily freeze funds

The U.S. Treasury is urging Congress to pass a digital asset-specific “hold law” that would let crypto platforms temporarily pause transfers of funds tied to suspected illegal activity, according to a report delivered to lawmakers under the GENIUS Act crypto regulation. The goal is to give exchanges and other institutions a defined window to hold assets so law enforcement can seek legal process before funds are moved or converted.

Treasury outlined a legal safe harbor that would allow financial institutions to temporarily and voluntarily hold digital assets linked to suspected crime during an investigation. The report also notes that lawful users may rely on privacy tools such as mixers on public blockchains, highlighting the need to balance enforcement with legitimate use cases.

Legal experts say banks can slow a transaction only in narrow circumstances and risk legal exposure if they retain funds without a court order or sanctions authority. Andrew Rossow, a public affairs attorney and CEO of AR Media Consulting, said that power is limited and awkward to use in practice. He added there’s no clear statutory safe harbor that lets a bank hold assets while an investigation is underway. The problem is even sharper for crypto platforms, which lack a built-in pending state or clean freeze option.

Supporters view a limited safe harbor as a way to improve coordination with investigators. They argue that the authority could strengthen how exchanges handle suspicious transactions and deepen public-private collaboration.

The recommendation lands while Congress considers broader crypto market structure legislation. President Donald Trump has pressed lawmakers to accelerate work on digital asset rules following disputes between banks and crypto firms. In recent comments, Eric Trump accused big banks of blocking stablecoin yields through the Clarity Act.

If Congress adopts a hold law, exchanges and other crypto businesses would gain explicit authority to pause suspect transfers during an investigation rather than having to choose between letting funds move or risking legal exposure by freezing them. The proposal is framed as providing clearer rules while leaving room for lawful privacy tools on public blockchains.