In the United States, as Congress resumes debate on the digital asset market structure bill known as the CLARITY Act, concerns are growing inside and outside the crypto industry about expanded financial surveillance.

On April 19 local time, blockchain outlet Cryptopolitan reported that Alex Thorn (알렉스 손), head of research at Galaxy Digital, warned that the bill’s current language includes provisions to broadly expand surveillance powers, beyond the regulatory clarity the industry had expected.

A core issue is the expansion of U.S. Treasury powers. In a client memo in January, Thorn said the detailed wording in the current bill contains the biggest expansion of financial surveillance since the USA PATRIOT Act. He said the Treasury’s Office of Foreign Assets Control already maintains lists of sanctioned Bitcoin addresses, but the CLARITY Act could further broaden tools to block and intervene in illicit assets.

According to analysis shared by Thorn, OFAC has designated 518 Bitcoin addresses for sanctions. Those addresses have cumulatively received 249,814 BTC and sent 239,708 BTC, and currently hold a net balance of about 9,306 BTC. The value was put at about $707 million. With the current sanctions regime already covering a significant scope, he said passage of the new bill could further expand the reach of surveillance and enforcement.

Supporters on the Senate Banking Committee argue the bill aims to crack down on illicit finance while protecting software developers and promoting innovation. The bill summary also states it grants law enforcement “new and targeted tools” to respond to money laundering, terrorist financing and sanctions evasion. Opponents, however, see the wording as something that could be interpreted more broadly in actual enforcement.

Cardano founder Charles Hoskinson (찰스 호스킨슨) also criticised the bill’s language as overly broad. He warned that a future administration could abuse the provisions regardless of which party is in power. Critics also say a structure that effectively classifies new digital assets as securities automatically, while leaving almost no path for reclassification, could curb competition.

In the decentralised finance (DeFi) sector, concerns have been raised that regulation could extend down to the software layer. An independent analysis of a previous draft noted it included a “Keep Your Coins Act” provision to prevent bans on self-custody, but also left loopholes that could allow government intervention on the grounds of combating illicit finance. In particular, the draft’s concept of a distributed ledger application layer raised concerns that imposing compliance obligations on software applications could push DeFi interfaces to monitor users.

Stakeholders around the bill are also clear. Wall Street financial firms such as JPMorgan and Citadel are actively lobbying the U.S. Securities and Exchange Commission to prevent tokenised securities from receiving separate preferential treatment. In a recent letter to the SEC, Thorn wrote: “Forcing a new structure to be a duplicate of the existing structure is not technology-neutral.” He also said decentralised automated market makers (AMMs) are “autonomously operating code,” not markets run by an organisation of people, and should not be classified as exchanges.

Interpretation of liquidity providers (LPs) is also in dispute. Thorn said AMM liquidity providers are not dealers facing customers but participants who trade using their own balance sheets. He also criticised banks and securities firms for publicly supporting Bitcoin while using Washington lobbying in practice to slow integration that could threaten their control over market structure.

Current legislative negotiations are focused on stablecoin reward structures. JPMorgan analysts said the dispute has narrowed to a few key questions, with stablecoin rewards at the centre. A tentative compromise being discussed would ban passive rewards generated solely by deposits while allowing activity-based rewards. Banks are concerned about deposit outflows, while opponents argue that removing yield provisions could be seen as the Senate prioritising banks’ interests over the public.

The legislative timetable is also a variable. Thorn said in March that if the CLARITY Act fails to pass committee by the end of April, the likelihood of it being handled this year is “extremely low.” With the Senate back from recess, whether negotiations make progress this month is expected to be a turning point for overhauling digital asset market structure and defining the scope of DeFi regulation.

Over the years, the United States has officially sanctioned 518 bitcoin addresses in total. These addresses are on OFAC’s SDN list. The 518 addresses combined have cumulatively received 249,814 BTC and sent 239,708 BTC. Today, sanctioned addresses still net hold 9,306 BTC worth about $707 million.