Crypto industry leaders, traditional banks, and policy experts are mounting a coordinated push for Congress to modernize the Bank Secrecy Act, the decades-old anti-money laundering framework that underpins U.S. financial regulation. The alignment signals rare consensus across sectors normally at odds over regulatory direction.
Why the Bank Secrecy Act Needs an Update
The Bank Secrecy Act, enacted in 1970, established the foundational AML and know-your-customer (KYC) compliance requirements that govern U.S. financial institutions. The law mandates customer identification, suspicious activity reporting, and transaction monitoring to combat money laundering and terrorist financing. However, the framework was designed for traditional banking infrastructure and predates digital assets, decentralized finance, and modern payment technologies by decades. Crypto platforms, decentralized exchanges, and non-custodial wallets operate in regulatory gray zones because the Act’s language does not explicitly address blockchain-native financial activity. Banks face compliance costs that have risen sharply as they attempt to integrate crypto services into legacy AML systems.
Rare Cross-Sector Agreement on Reform
The joint advocacy from crypto, banking, and policy experts reflects uncommon consensus on a regulatory issue. Crypto industry participants have long criticized the Bank Secrecy Act as too vague for digital asset compliance. Banks, meanwhile, face operational friction when serving crypto companies because regulators interpret the Act inconsistently across jurisdictions. Policy experts argue that modernizing the framework would clarify compliance obligations, reduce regulatory uncertainty, and allow legitimate innovation to proceed without creating new money laundering risks. This alignment reduces the likelihood that reform will be dismissed as special-interest pleading from a single sector.
What Modernization Could Address
A revised Bank Secrecy Act could establish clear definitions for custodians, exchanges, and wallet providers under AML law. It might set proportional compliance requirements based on business model and risk profile, allowing smaller platforms to avoid disproportionate burden. Modernization could also clarify how cross-border crypto transfers should be monitored and reported, and whether decentralized finance protocols face different obligations than centralized exchanges. The specifics of any legislative proposal remain unclear, and Congress has not yet scheduled hearings or introduced formal reform language.
Next Steps Remain Undefined
No timeline for congressional action has been announced. Lawmakers face competing priorities and may view financial regulation reform as lower urgency than other issues. Regulatory agencies like FinCEN and the SEC could also issue guidance that partially addresses modernization concerns without requiring legislative change. The advocacy effort signals that stakeholders view the current framework as unsustainable, but translating that consensus into statute requires sustained political pressure and detailed legislative drafting.
