Key Takeaways
- (FRS) and (FinCEN) are working to amend the definition of “money” within the Bank Secrecy Act to ensure that regulations include digital asset transactions.
- The final notice of proposed rulemaking is expected in September 2025, pending clearance.
Several U.S. federal agencies are working on updating the definition of “money” to enhance reporting obligations for financial institutions engaged in cryptocurrency transactions. This initiative aims to align the regulatory standards for digital assets with those governing traditional fiat currency.
On August 16, the U.S. Department of the Treasury’s semiannual regulatory agenda revealed plans for a federal initiative focused on applying these revised standards to both domestic and international transactions involving convertible virtual currencies, such as Bitcoin and Ethereum. These digital currencies, while recognized as having value equivalent to traditional money or serving as substitutes, do not hold legal tender status.
The Board of Governors of the Federal Reserve System (FRS) and the Financial Crimes Enforcement Network (FinCEN) are leading this effort. They intend to amend the definition of “money” within the Bank Secrecy Act to ensure that regulations encompass transactions involving digital assets. Additionally, the proposal will extend reporting requirements to include digital assets with legal tender status, such as central bank digital currencies.
“The agencies (FRS and FinCEN) intend that the revised proposal will ensure that the rules apply to domestic and cross-border transactions involving convertible virtual currency, which is a medium of exchange (such as cryptocurrency) that either has an equivalent value as currency or acts as a substitute for currency, but lacks legal tender status”, it reads
The agenda indicates that the final notice of proposed rulemaking is expected in September 2025, pending clearance. This revision aims to ensure that financial institutions maintain comprehensive reporting practices that cover cryptocurrency transactions.
Beyond cryptocurrency, other regulatory updates are also underway. On August 7, the Department of Justice (DOJ) requested the United States Sentencing Commission to revise its guidelines to impose harsher penalties for crimes facilitated by artificial intelligence.
In May, the U.S. Treasury and IRS introduced new tax guidelines for cryptocurrency brokers. Beginning in 2026, these regulations will require detailed reporting and record-keeping of token transactions, aligning with the Organization for Economic Cooperation and Development’s (OECD) Crypto Asset Reporting Framework (CARF). This framework mandates that exchanges, brokers, custodians, and wallet providers collect and report transaction information to local tax authorities.
These regulatory efforts coincide with ongoing debates about the legal status of crypto services. Earlier this year, Senators Ron Wyden and Cynthia Lummis raised concerns about the DOJ’s approach to treating crypto software services as unlicensed money-transmitting businesses. The senators emphasized that FinCEN has previously determined that non-custodial crypto services should not be classified as money transmitters.
