Sponsor
Sean Casten
Representative · D-IL
Representative · D-IL
The bill strengthens AML/sanctions compliance, cybersecurity, and regulatory clarity for DeFi—improving consumer and national security protections—but does so by imposing compliance obligations that raise costs, can erode privacy and decentralization, and risk pushing activity offshore or creating legal uncertainty for small or decentralized projects.
Taxpayers and crypto users will see stronger anti-money‑laundering and sanctions protections because DeFi services would be required to run risk‑based AML and sanctions compliance programs, improving detection and reducing exposure to illicit or sanctioned actors.
Developers, firms, and banks gain clearer rules because definitions and FinCEN/Treasury guidance clarify when Bank Secrecy Act and Treasury oversight apply, reducing legal uncertainty and helping businesses plan compliance and investment.
Consumers and the public benefit from stronger cybersecurity and tested on‑chain/front‑end compliance tools (e.g., smart contract integrations and standards) that reduce fraud and cyber risk in DeFi services.
Developers, smaller DeFi projects, and users will face higher compliance, monitoring, and reporting costs, likely raising fees, slowing innovation, and reducing competition.
Privacy‑focused users and projects will lose features and some decentralization, because increased monitoring and regulatory controls can limit privacy-preserving designs and opaque, permissionless service models.
The U.S. crypto ecosystem and taxpayers risk losing activity to offshore or unregulated venues if guidance is too prescriptive or compliance costs push developers and users abroad, reducing U.S. oversight and tax base.
Based on analysis of 6 sections of legislative text.
Requires Treasury and FinCEN actions to test and guide embedding AML, sanctions, identity, and cybersecurity controls into DeFi and mandates rulemaking requiring BSA‑compliant AML and sanctions programs for DeFi services.
Official title: To require the Secretary of the Treasury to develop a public-private partnership program to examine innovative anti-money laundering solutions for decentralized finance services, and for other purposes.
Introduced July 15, 2025 by Sean Casten · Last progress July 15, 2025
Requires the Treasury to lead a short-term public‑private program to test and recommend ways to embed anti‑money‑laundering, sanctions screening, identity verification, and cybersecurity controls into decentralized finance (DeFi) systems and smart contracts; directs FinCEN to publish an advisory on responsible DeFi operations; and mandates Treasury rulemaking to define DeFi terms and require DeFi services to maintain risk‑based AML and sanctions compliance programs consistent with the Bank Secrecy Act. The measure sets deadlines for program creation and rule issuance, excludes entities controlled by specified high‑level public officials, and provides definitions for covered terms.