Top US Agencies Aim to Redefine “Money” for Cryptocurrency Reporting Regulations by 2025
Top federal agencies in the United States are collaborating to revise the definition of “money” under existing regulations in an effort to tighten cryptocurrency reporting requirements for financial institutions, particularly concerning domestic and cross-border cryptocurrency transactions.
Federal Agencies Collaborate on Cryptocurrency Reporting Standards
On Aug. 16, the U.S. Department of the Treasury unveiled its semiannual regulatory agenda, which outlines upcoming efforts to bring cryptocurrencies under a similar regulatory framework as traditional fiat currencies. This could introduce changes to cryptocurrency reporting requirements.
The Board of Governors of the Federal Reserve System (FRS) and the Financial Crimes Enforcement Network (FinCEN) are spearheading this initiative. According to the agenda, these agencies plan to amend the definition of “money” in the Bank Secrecy Act to encompass convertible virtual currencies, such as cryptocurrencies. The revised definition will ensure that the existing rules apply to both domestic and cross-border transactions involving digital assets, including those with legal tender status, like central bank digital currencies (CBDCs).
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In a statement from the regulatory agenda, the agencies clarified their intentions:
“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.”
This move is part of a broader effort to level the regulatory playing field between cryptocurrencies and traditional financial systems. By treating cryptocurrencies as money under reporting requirements, the agencies aim to close potential loopholes that could be exploited for illicit financial activities, including money laundering and terrorist financing.
The final notice of proposed rulemaking is expected to be issued by September 2025, pending clearance.
Broader Implications for the Cryptocurrency Industry
This development is likely to have far-reaching implications for the cryptocurrency industry. Financial institutions dealing with digital assets will need to adhere to stricter cryptocurrency reporting guidelines, which could increase compliance costs but also enhance the transparency and legitimacy of cryptocurrency transactions.
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The U.S. government’s focus on tightening cryptocurrency reporting is further evidenced by recent actions, such as the movement of approximately 10,000 Bitcoin linked to the notorious Silk Road marketplace. On Aug. 14, the government transferred these assets, indicating an ongoing effort to track and manage illicit funds associated with cryptocurrencies.
DOJ Updates AI Guidelines to Address Emerging Threats
In a related development, the U.S. Department of Justice (DOJ) is also updating its regulations, but in the realm of artificial intelligence (AI). On Aug. 7, the DOJ requested the U.S. Sentencing Commission to revise its guidelines to impose additional penalties for crimes committed with the assistance of AI.
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The proposed changes aim to go beyond existing guidelines, applying not only to AI-assisted crimes but also to offenses facilitated by simpler algorithms. This highlights the government’s proactive approach in addressing the challenges posed by new technologies in both the financial and criminal justice systems.
As the federal government intensifies its scrutiny of cryptocurrencies and AI, these developments underscore the increasing importance of robust regulatory frameworks in maintaining the integrity and security of the financial system in the digital age.
