Just when we thought the storm in the world of "crypto and regulation" had calmed down, the powers that be decided to stir things up again. The U.S. Department of the Treasury and the Federal Reserve System recently announced their plans to give the term "money" a makeover under the Bank Secrecy Act. They want to include cryptocurrencies and digital assets in the new reporting requirements.
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On August 16, the Treasury Department dropped its semi-annual regulatory agenda, hinting at the federal government’s upcoming attempt to level the playing field between crypto and fiat currency.
The Board of Governors of the Federal Reserve System and the Financial Crimes Enforcement Network (FinCEN) are gearing up to redefine "money" as it's used in the Bank Secrecy Act, with an eye on tightening reporting requirements for both domestic and cross-border crypto transactions.
According to the agenda:
"The agencies (FRS and FinCEN) intend for the revised proposal to apply the rules to both domestic and cross-border transactions involving convertible virtual currency, which is a medium of exchange (e.g., cryptocurrency) that either has an equivalent value as currency or acts as a substitute for currency but lacks the status of legal tender."
The proposal will also extend reporting requirements to digital assets that do hold the status of legal tender, including central bank digital currencies.
However, it will also cover digital assets that have legal tender status, including central bank digital currencies. The proposed rulemaking's final notice is scheduled for September 2025, pending approval.
What does this mean for crypto transactions if the law gets the green light?
If you or your business deals with cryptocurrencies, the approval of such a law might require you to rethink your strategies and procedures to align with the new regulations.
First off, cryptocurrencies and digital assets would be officially recognized as "money" under the Bank Secrecy Act (BSA). This means that financial institutions handling crypto transactions would have to comply with stricter reporting requirements for domestic and international operations.
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Key takeaways:
- Banks and other financial institutions will need to report crypto transactions under the same rules that apply to traditional money transfers. This includes both domestic and cross-border operations.
- All crypto transactions involving mediums of exchange like Bitcoin and Ethereum would be subject to the same reporting requirements as traditional currency. This could increase the complexity and cost of operations for those using cryptocurrencies.
- If central banks roll out their own digital currencies, these too would fall under the same regulations. CBDCs would be regulated just like traditional currencies.
The goal of such a law is to boost transparency and reduce the chances of cryptocurrencies being used for illegal activities, such as money laundering or terrorist financing.
In short, if this bill passes, it will tighten regulation of the U.S. crypto market, making it more transparent and completing anonymous transactions much more difficult.
Artificial Intelligence and the Law
But don’t think that only cryptocurrency is getting the regulatory squeeze from the powers that be. The U.S. Department of Justice (DOJ) is also busy tweaking rules and legal guidelines for artificial intelligence.
On August 7, the DOJ asked the U.S. Sentencing Commission to update its guidelines to include tougher penalties for crimes committed using AI.
These recommendations go well beyond the established guidelines and apply to crimes directly committed with AI and any crimes facilitated or encouraged by simple algorithms.
HODL Team
