Sponsors
This bill trades clearer legal definitions, guidance, and faster incorporation of AML/sanctions and cybersecurity controls into DeFi—aimed at reducing illicit finance risks—for higher compliance costs, reduced on‑chain privacy, and the risk of regulatory overreach or uncertainty that could chill innovation and push activity offshore.
Taxpayers, ordinary users, and the broader financial system would face lower risks of money laundering, fraud, and sanctions evasion because DeFi platforms and smart contracts would be encouraged or required to incorporate AML, sanctions, and cybersecurity controls.
Developers, operators, and crypto businesses would gain clearer statutory definitions and FinCEN guidance, reducing legal ambiguity and making it easier to design services that comply with Bank Secrecy Act obligations.
FinTech and DeFi developers and regulators would benefit from a public-private testing and recommendation process that leverages industry technical expertise to produce more informed, implementable AML/sanctions design options for smart contracts and DeFi services.
DeFi developers, platforms, and related vendors would face materially higher compliance and development costs to build and operate BSA-like AML, sanctions, and cybersecurity programs, which could raise user fees, slow innovation, and incentivize moving services offshore.
Users (including relatives of covered officials) would face reduced on-chain privacy and greater surveillance risk because recommendations and requirements could encourage on-chain identity, transaction monitoring, or coverage of household members' activity.
Broad or vague statutory definitions and delegated discretion to Treasury could create unpredictable expansions of regulatory scope, producing legal uncertainty for providers, analytics vendors, and users about what services are covered.
Based on analysis of 6 sections of legislative text.
Directs Treasury to run a DeFi public–private testing program, requires FinCEN guidance, and mandates a BSA rule requiring risk-based AML and sanctions programs for DeFi services.
Introduced July 15, 2025 by Sean Casten · Last progress July 15, 2025
Directs the Treasury to stand up a time-limited public–private program to work with decentralized finance (DeFi) developers and risk experts to test and integrate anti-money-laundering (AML), sanctions, identity, and cybersecurity controls into smart contracts and front-end interfaces. Requires FinCEN to publish a public advisory on responsible DeFi development and orders Treasury to issue a final rule within 30 months to define DeFi terms and require risk-based AML and sanctions compliance programs for DeFi services.