Treasury enlists crypto firms to write their own compliance rules

What it does

This bill directs the Treasury Secretary to convene a public-private partnership with decentralized finance (DeFi) companies and compliance experts to develop technical solutions for embedding anti-money laundering, identity verification, and sanctions controls into blockchain-based financial applications. The partnership will test these controls, recommend regulatory changes, and sunset after 18 months; Treasury must then issue formal rules requiring DeFi services to implement AML and sanctions compliance programs. The bill excludes government officials and their families from participating in the partnership.

Why we flagged it

The bill's core function is to establish a structured process for developing DeFi compliance standards through government-industry collaboration, followed by formal rulemaking. It is neither a deregulation nor a pure enforcement measure, but rather a framework-building exercise that delegates significant design authority to private participants.

What the text implies

• The partnership's recommendations (Section 3(5)) are non-binding on Treasury but must be 'taken into account' by agencies during rulemaking—creating a soft obligation that may entrench industry preferences into final rules without explicit legislative direction.
• Defining 'decentralized finance service' and 'decentralized smart contract' is deferred to Treasury rulemaking (Section 5), leaving the scope of future compliance obligations undefined until 30 months post-enactment; this creates regulatory uncertainty and potential for narrow or broad application depending on agency discretion.
• The exclusion of 'covered persons' (government officials and families) from the partnership is a conflict-of-interest safeguard, but the partnership itself includes no transparency requirement—meetings, participant lists, and deliberations may remain private, limiting public oversight of how industry shapes compliance standards.
• The bill's focus on 'integrated controls' and 'smart contract behavior' may inadvertently favor large, technically sophisticated DeFi platforms capable of embedding compliance into code, while smaller or decentralized projects may face higher compliance costs, potentially concentrating market power.
• The 18-month sunset on the partnership (Section 3) creates a compressed timeline for industry input before formal rulemaking, potentially favoring well-resourced firms with existing regulatory affairs capacity over smaller or emerging DeFi services.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

The bill advances a legitimate public interest—strengthening AML/sanctions compliance in an emerging financial sector vulnerable to illicit use and foreign exploitation—by fostering technical innovation and regulatory clarity. However, the public-private partnership structure gives DeFi companies significant influence over the design of compliance standards that will later be imposed on them, creating a capture risk where industry preferences may shape rules in their favor rather than in the pub

Who stands to gain

• blockchain analytics firms
• identity verification software providers
• smart contract auditors
• blockchain cybersecurity service providers
• large decentralized finance platforms with technical capacity to embed compliance controls

Named in the bill

Treasury Department, Financial Crimes Enforcement Network (FinCEN), Office of Foreign Assets Control (OFAC), Federal Bureau of Investigation (FBI), US Secret Service, National Institute of Standards and Technology (NIST), Cybersecurity and Infrastructure Security Agency (CISA), decentralized finance services, blockchain analytics firms, smart contract auditors

Where it stands

• Jul 15, 2025 — Introduced · Congress.gov: “Introduced in House”
• Jul 15, 2025 — Referred to House Committee on Financial Services · Congress.gov: “Referred to the House Committee on Financial Services”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

2 lobbying clients named this bill on 3 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $890,000 in lobbying spend. A filing names 7 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 41% of bills with at least one filing.

Sean Casten, the sponsor, reported $783,050 in PAC receipts in the 2026 cycle.

• Association of Equipment Manufacturers — $810,000 on 1 filing
• Riverside Co. Flood Control & Water Conservation District — $80,000 on 2 filings

Lobbying Disclosure Act filings through Jul 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.