the Compliant Operations of Decentralized Entities Act of 2025

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.

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.

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.

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.

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.

Decentralized finance services present unique cybersecurity risks and have been vulnerable to exploitation campaigns by North Korean threat actors.

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.

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—

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.

Sunset— The public-private partnership program developed under subsection (a) shall terminate 18 months after the date of enactment of this Act.

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.

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.

further define the terms “decentralized finance service” and “decentralized smart contract”; and

expressly require that a decentralized finance service implements and maintains—

Bank Secrecy Act— The term “Bank Secrecy Act” means—

Covered person— The term “covered person” means—

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—

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.

Public blockchain network— The term “public blockchain network” means an open source, decentralized, permissionless distributed ledger system that records digital asset transactions.

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—

Senior executive branch employee— The term “senior executive branch employee” means an executive branch employee—