The United States is moving to treat cryptocurrencies with the same scrutiny as traditional fiat currencies, signaling a significant shift in how digital assets are integrated into the financial system. The U.S. Department of the Treasury, in its semiannual regulatory agenda, announced plans to redefine “money” under the Bank Secrecy Act (BSA) to include cryptocurrencies and other digital assets, bringing them under stricter financial reporting requirements.
Stricter Reporting Rules for Cryptocurrencies
The Board of Governors of the Federal Reserve System, the Federal Reserve, and the Financial Crimes Enforcement Network (FinCEN) are preparing to propose new rules that clarify the definition of “money” under the Bank Secrecy Act. These rules aim to extend financial reporting requirements to both domestic and cross-border cryptocurrency transactions.
The updated regulations will cover a broad spectrum of digital assets, including those backed by traditional currencies and potential future central bank digital currencies (CBDCs). FinCEN is also revising its rules to impose stricter regulations on banks and money transfer businesses dealing with “convertible virtual currencies or digital assets with legal tender status.” These regulations will require businesses to verify customer identities, maintain comprehensive records, and file specific reports for transactions involving these digital assets, particularly those held in unhosted or foreign-hosted wallets.
The proposed updates to the BSA are expected to have significant implications for the cryptocurrency industry. Compliance costs for crypto businesses may increase as they adjust to the new reporting requirements. Additionally, the broader definition of “money” could subject a wider range of digital assets to regulation, potentially affecting innovation within the sector. The final rulemaking process is projected to extend over a year, with a target completion date in September 2025.
Expanding the Push for Crypto Regulation
These proposed changes are part of a broader effort by the U.S. government to understand and regulate digital assets. On June 28, the Treasury Department and the Internal Revenue Service (IRS) issued final regulations outlining tax reporting requirements for cryptocurrency brokers. Starting in 2026, brokers will be required to report the total proceeds from cryptocurrency sales made in 2025. By 2027, brokers must also provide information on the tax basis of certain digital assets sold in 2026.
The Treasury Department anticipates that these rules will enhance tax enforcement, particularly among high-net-worth investors, while simplifying the tax filing process for cryptocurrency holders. The final regulations were developed after extensive public input, including a public hearing and the review of over 44,000 comments.
U.S. Government Continues Large-Scale Bitcoin Transfers
In a related development, on August 14, the U.S. government transferred approximately 10,000 Bitcoin (BTC), worth around $594 million, to a new wallet address. These funds were seized during the infamous Silk Road raid, according to blockchain analytics firm Arkham Intelligence. This is the second major Bitcoin movement by the government in recent weeks. On July 29, nearly 30,000 Bitcoin, valued at approximately $2 billion, were moved from government wallets to an unknown address. Currently, the U.S. government holds around 203,000 Bitcoin, representing a digital asset portfolio valued at approximately $12 billion.
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