Governments around the world are significantly increasing surveillance on cryptocurrency transactions as part of broader efforts to regulate digital assets, combat fraud, and prevent illicit finance activities such as money laundering and terrorism financing. This trend reflects a growing recognition by authorities that cryptocurrencies, while offering innovation and financial inclusion, also pose unique challenges for law enforcement and regulatory agencies.
In the United States, a notable example is the launch of the Scam Center Strike Force in November 2025, which represents a “whole-of-government” approach to tackling global crypto fraud. This initiative integrates the powers of multiple agencies, including prosecutors, intelligence analysts, and financial regulators, to coordinate actions against illicit crypto activities. The Financial Crimes Enforcement Network (FinCEN) plays a central role by combining Suspicious Activity Reports (SARs) filed by banks and crypto exchanges with blockchain intelligence to map laundering networks. FinCEN can also use Section 311 of the USA PATRIOT Act to designate entities or jurisdictions as primary money-laundering concerns, effectively isolating them from the US financial system. The Office of Foreign Assets Control (OFAC) complements this by imposing sanctions that freeze assets and block wallet addresses linked to illicit actors, requiring US-linked businesses to block transactions with these entities. This coordinated effort allows for rapid interdiction, asset freezing, and legal actions against offenders, demonstrating a sophisticated and multi-layered surveillance and enforcement framework[1].
Regulatory agencies such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are also advancing comprehensive oversight frameworks for crypto assets. The SEC’s “Project Crypto,” for example, aims to modernize the regulatory environment by establishing clear rules for trading and custody of digital assets. This includes efforts to streamline licensing, reduce duplicative requirements, and introduce a token taxonomy to classify different types of crypto assets. These regulatory developments are expected to enhance transparency and compliance, making it easier for authorities to monitor transactions and enforce laws[2][7][8].
Internationally, countries are adopting various measures to increase surveillance and control over crypto transactions. India’s Financial Intelligence Unit (FIU-IND) has issued notices to multiple crypto exchanges for alleged anti-money laundering violations, demanding registration and compliance with reporting requirements. Australia is proposing legislation to bring digital asset platforms under its financial services regulatory regime, requiring licenses and oversight by the Australian Securities and Investments Commission (ASIC). These moves reflect a global trend toward integrating crypto platforms into existing financial regulatory frameworks to ensure better monitoring and risk management[3][6].
The rationale behind increased government surveillance on crypto transactions is rooted in the need to prevent the misuse of digital assets for illegal purposes. Cryptocurrencies can be transferred quickly and across borders without intermediaries, which complicates traditional regulatory approaches. To address this, legislative proposals are pushing for crypto intermediaries to be subject to rules similar to banks, including identity verification, suspicious activity reporting, and sanctions enforcement. However, authorities recognize that these measures must also cover transactions that occur without intermediaries, requiring new tools and technologies to track and analyze blockchain activity effectively[4].
Emerging technologies such as receipt-based cryptography are being explored to fill evidentiary gaps in compliance regimes. This approach would allow verifiable proof of compliance or non-events (such as no unauthorized access or wash trades) to be used in regulatory examinations and enforcement actions. The SEC is considering pilot programs to test these cryptographic proofs in real-world compliance workflows, which could enhance the ability of regulators to surveil and verify crypto transactions without compromising privacy unnecessarily[5].
Overall, governments are moving toward a more integrated, technology-driven, and legally robust system of surveillance on cryptocurrency transactions. This includes combining financial intelligence, blockchain analytics, sanctions enforcement, and regulatory oversight to detect and disrupt illicit activities. While these efforts aim to protect consumers and financial systems, they also raise important questions about privacy, innovation, and the balance between regulation and the decentralized nature of cryptocurrencies. The evolving regulatory landscape suggests that surveillance on crypto transactions will continue to intensify as governments seek to keep pace with the rapid growth and complexity of the digital asset ecosystem.