In a coordinated effort to tighten the regulatory oversight of cryptocurrencies, key federal agencies in the United States are revising the definition of “money” as it pertains to financial reporting requirements. On August 16, the U.S. Department of the Treasury released its semiannual regulatory agenda, signaling a federal initiative to bring cryptocurrency under the same regulatory framework as traditional fiat currencies.
The Board of Governors of the Federal Reserve System (FRS) and the Financial Crimes Enforcement Network (FinCEN) are leading this charge. Their primary objective is to revise the definition of “money” under the Bank Secrecy Act (BSA) to ensure that cryptocurrencies are subject to the same reporting requirements as traditional currencies.
Cryptocurrency as “Money” for Reporting Purposes
According to the regulatory agenda, the proposed revisions will ensure that the BSA’s rules apply to both domestic and cross-border transactions involving convertible virtual currencies (CVCs). CVCs are defined as a medium of exchange, such as cryptocurrencies, that either have an equivalent value to currency or act as a substitute for currency, but lack legal tender status.
The revised regulations will also extend reporting requirements to digital assets that do possess legal tender status, including central bank digital currencies (CBDCs). This move represents a significant step toward integrating cryptocurrencies into the broader financial regulatory landscape, aligning them more closely with traditional financial systems.
The agencies are planning to issue a final notice of proposed rulemaking by September 2025, pending clearance. This timeline suggests that while the changes are on the horizon, there will be a period of public comment and possible revisions before the new rules are formally adopted.
The proposed changes will have broad implications for financial institutions that handle cryptocurrency transactions. These institutions will need to update their compliance programs to include reporting requirements for digital assets. This could involve significant adjustments to existing systems and processes to ensure that all transactions, whether in traditional currency or cryptocurrency, are reported in accordance with the revised BSA guidelines.
This push to revise the definition of money follows recent actions by the U.S. government involving cryptocurrencies. On August 14, for instance, the government transferred approximately 10,000 Bitcoin linked to an old Silk Road raid. This transaction highlights the ongoing attention the government is paying to large-scale cryptocurrency holdings and the need for stringent regulatory oversight.
DOJ’s Focus on AI in Crime
In addition to tightening cryptocurrency regulations, the U.S. Department of Justice (DOJ) is also updating its guidelines to address crimes committed with the aid of artificial intelligence (AI). On August 7, the DOJ requested that the U.S. Sentencing Commission update its guidelines to impose additional penalties for crimes involving AI. This recommendation is part of a broader effort to ensure that the legal system keeps pace with technological advancements that can be exploited for criminal activity.
The DOJ’s recommendations extend beyond crimes directly involving AI. The guidelines aim to cover any crime that is aided or abetted by simple algorithms, reflecting the increasing integration of AI into various aspects of society. This approach underscores the need for a comprehensive legal framework that can address the complexities introduced by emerging technologies.
The U.S. government’s efforts to redefine “money” under the Bank Secrecy Act and extend reporting requirements to cryptocurrencies are part of a broader strategy to modernize financial regulations in the face of rapidly evolving technology. As the proposed changes move toward finalization, financial institutions will need to prepare for significant shifts in compliance requirements. At the same time, the DOJ’s focus on AI-related crimes highlights the growing importance of adapting legal frameworks to address new technological challenges. These developments mark a critical juncture in the U.S. regulatory landscape, with far-reaching implications for both the financial sector and the broader legal system.
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