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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4394 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 4394
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 15, 2025
Mr. Casten introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as ``the Compliant Operations of
Decentralized Entities Act of 2025'' or the ``the CODE Act of 2025''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) In 2019, under the Trump Administration, the Financial
Crimes Enforcement Network issued guidance (FIN-2019-G001) to
clarify that decentralized finance applications may be required
to register with the agency and comply with the Bank Secrecy
Act, including anti-money laundering, recordkeeping, and
reporting requirements.
(2) In 2019, under the Trump Administration, the Financial
Crimes Enforcement Network published an advisory (FIN-2019-
A003) noting that the prevalence of unregistered cryptocurrency
entities without sufficient anti-money laundering controls
enables illicit activity that threatens national security.
(3) In 2022, under the Biden Administration, the Federal
Bureau of Investigation published a public service announcement
(I-082922-PSA) encouraging decentralized finance services to
institute real-time analytics, monitoring, and rigorous testing
of the computer code to more quickly identify vulnerabilities
and respond to indicators of suspicious activity.
(4) In 2023, under the Biden Administration, the Commodity
Futures Trading Commission issued a report (``Decentralized
Finance''), advocating for building regulatory compliance into
decentralized finance systems and noting that areas like
illicit finance compliance and cybersecurity are ripe for this
kind of near-term action by software developers.
(5) Decentralized finance services may be subject to Bank
Secrecy Act requirements, but there is a lack of
standardization across decentralized finance services and
compliance processes.
(6) Decentralized finance services present unique
cybersecurity risks and have been vulnerable to exploitation
campaigns by North Korean threat actors.
(7) Decentralized finance services and the broader
cryptocurrency ecosystem could benefit from a set of
technological controls that are coherent, consistent, and
capable of satisfying Bank Secrecy Act requirements.
SEC. 3. PUBLIC-PRIVATE PARTNERSHIP PROGRAM FOR DECENTRALIZED FINANCE
SERVICES.
(a) In General.--Not later than 6 months after the date of
enactment of this Act, the Secretary of the Treasury, in consultation
with the Financial Crimes Enforcement Network, the Office of Foreign
Assets Control, the Federal Bureau of Investigation, the United States
Secret Service, the National Institute of Standards and Technology, the
Cybersecurity and Infrastructure Security Agency, and such other
relevant agencies as determined by the Secretary of the Treasury, shall
develop a public-private partnership program with decentralized finance
services and relevant risk management experts to--
(1) focus on decentralized finance applications and front-
end user interfaces;
(2) consider integrating anti-money laundering, identity
verification, sanctions, and cybersecurity controls and other
technological solutions into decentralized smart contracts
prior to deployment on a public blockchain network;
(3) test the capabilities of such integrated controls in
decentralized smart contracts;
(4) consider establishing a regulatory gateway to external,
verifiable data inputs and outputs that are capable of
upgrading smart contract behavior after it has been deployed;
and
(5) provide legislative and regulatory recommendations
related to integrated compliance mechanisms for decentralized
finance services.
(b) Prohibition on Certain Participants.--Participants selected for
the public-private partnership program required under subsection (a)
shall not include a decentralized finance service owned or controlled,
directly or indirectly, by a covered person.
(c) Sunset.--The public-private partnership program developed under
subsection (a) shall terminate 18 months after the date of enactment of
this Act.
(d) Rule of Construction.--Nothing in subsection (a) shall be
construed to limit, impair, or otherwise affect the supervisory,
regulatory, or enforcement authority or the jurisdiction of the
agencies described in subsection (a) under any applicable law.
(e) Interagency Coordination.--The Secretary of the Treasury shall
share the recommendations provided pursuant to subsection (a)(5) with
other appropriate agencies, and such agencies shall take the
recommendations into account when issuing rules or carrying out
supervisory functions.
SEC. 4. FINCEN ADVISORY.
Not later than 18 months after the date of enactment of this Act,
the Financial Crimes Enforcement Network shall publish an advisory
related to the responsible development, deployment, and ongoing
operation of decentralized finance services on a public blockchain
network for the purposes of strengthening compliance with the Bank
Secrecy Act.
SEC. 5. RULEMAKING TO MODERNIZE AND STRENGTHEN BANK SECRECY ACT
REQUIREMENTS FOR DECENTRALIZED FINANCE SERVICES.
Not later than 30 months after the date of enactment of this Act,
the Secretary of the Treasury shall issue a rule to--
(1) further define the terms ``decentralized finance
service'' and ``decentralized smart contract''; and
(2) expressly require that a decentralized finance service
implements and maintains--
(A) a risk-based anti-money laundering program that
meets the requirements under the Bank Secrecy Act; and
(B) a risk-based sanctions compliance program.
SEC. 6. DEFINITIONS.
In this Act:
(1) Bank secrecy act.--The term ``Bank Secrecy Act''
means--
(A) section 21 of the Federal Deposit Insurance Act
(12 U.S.C. 1829b);
(B) chapter 2 of title I of Public Law 91-508 (12
U.S.C. 1951 et seq.); and
(C) subchapter II of chapter 53 of title 31, United
States Code.
(2) Covered person.--The term ``covered person'' means--
(A) the President;
(B) the Vice President;
(C) a Member of Congress;
(D) a senior executive branch employee; or
(E) the spouse, child, son-in-law, or daughter-in-
law, as determined under applicable common law, of any
individual described in subparagraph (A), (B), (C), or
(D).
(3) Decentralized finance service.--The term
``decentralized finance service'' means a protocol,
application, or service that, through the use of decentralized
smart contracts deployed on a public blockchain network,
facilitates digital asset transactions or the exchange of
digital assets for other digital assets or fiat currency and
may include--
(A) a peer-to-peer digital asset trading platform;
(B) a digital asset lending protocol;
(C) a digital asset staking or liquidity service;
(D) a digital asset mixing service;
(E) a cross-chain bridge service provider; or
(F) any other decentralized finance service
determined by the Secretary of the Treasury.
(4) Decentralized smart contract.--The term ``decentralized
smart contract'' means a digital contract or collections of
computer code on a public blockchain network that are
automatically executed if specific conditions are met.
(5) Public blockchain network.--The term ``public
blockchain network'' means an open source, decentralized,
permissionless distributed ledger system that records digital
asset transactions.
(6) Risk management expert.--The term ``risk management
expert'' means a person or entity with specialized knowledge or
expertise in identifying, preventing, and managing illicit
finance, cybersecurity, or compliance risks associated with
decentralized finance services, and may include--
(A) an identity verification software provider;
(B) a fraud detection service;
(C) a blockchain analytics firm;
(D) a smart contract auditor;
(E) a blockchain oracle service;
(F) a blockchain cybersecurity service; and
(G) any other relevant risk management experts as
determined by the Secretary of the Treasury.
(7) Senior executive branch employee.--The term ``senior
executive branch employee'' means an executive branch
employee--
(A) who is employed in a position listed in section
5312 of title 5, United States Code, or for which the
rate of pay is equal to the rate of pay payable for
level I of the Executive Schedule;
(B) who is employed in a position--
(i) in the Executive Office of the
President; and
(ii) listed in section 5313 of title 5,
United States Code, or for which the rate of
pay is equal to the rate of pay payable for
level II of the Executive Schedule;
(C) who is appointed by the President pursuant to
section 105(a)(2)(A) of title 3, United States Code; or
(D) who is appointed by the Vice President pursuant
to section 106(a)(1)(A) of title 3, United States Code.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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