,i  #aaith ,,congress  #ast ,session    
,h4 ,r4 #dcid  ,,in ,,the ,,house ,,of  
,,representatives  ,july #ae1 #bjbe,mr4 
,casten introduced the following bill2  
which was referred to the ,committee on 
,financial ,services  ,a ,,bill  ,to    
require the ,secretary of the ,treasury 
to develop a public-private partnership 
program to examine innovative anti-money
 laundering solutions for decentralized 
finance services1 and for other         
purposes4  #a4 ,short title  ,this ,act 
may be cited as the ,compliant          
,operations of ,decentralized ,entities 
,act of #bjbe or the the ,,code ,act of 
#bjbe4  #b4 ,findings ,the ,congress    
finds the following3 7#a7 ,in #bjai1    
under the ,trump ,administration1 the   
,financial ,crimes ,enforcement ,network
 issued guidance 7,,fin-#bjai-;,g#jja7  
to clarify that decentralized finance   
applications may be required to register
 with the agency and comply with the    
,bank ,secrecy ,act1 including          
anti-money laundering1 recordkeeping1   

and reporting requirements4  7#b7 ,in   
#bjai1 under the ,trump ,administration1
 the ,financial ,crimes ,enforcement    
,network published an advisory          
7,,fin-#bjai-;,a#jjc7 noting that the   
prevalence of unregistered              
cryptocurrency entities without         
sufficient anti-money laundering        
controls enables illicit activity that  
threatens national security4  7#c7 ,in  
#bjbb1 under the ,biden ,administration1
 the ,federal ,bureau of ,investigation 
published a public service announcement 
7,i-#jhbibb-,,psa7 encouraging          
decentralized finance services to       
institute real-time analytics1          
monitoring1 and rigorous testing of the 
computer code to more quickly identify  
vulnerabilities and respond to          
indicators of suspicious activity4  7#d7
 ,in #bjbc1 under the ,biden            
,administration1 the ,commodity ,futures
 ,trading ,commission issued a report   
7,decentralized ,finance71 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 developers4  7#e7              
,decentralized finance services may be  
subject to ,bank ,secrecy ,act          
requirements1 but there is a lack of    
standardization across decentralized    
finance services and compliance         
processes4  7#f7 ,decentralized finance 
services present unique cybersecurity   
risks and have been vulnerable to       
exploitation campaigns by ,north ,korean
 threat actors4  7#g7 ,decentralized    
finance services and the broader        
cryptocurrency ecosystem could benefit  
from a set of technological controls    
that are coherent1 consistent1 and      
capable of satisfying ,bank ,secrecy    
,act requirements4  #c4 ,public-private 
partnership program for decentralized   
finance services  7a7 ,in general ,not  
later than #f months after the date of  
enactment of this ,act1 the ,secretary  

of the ,treasury1 in consultation with  
the ,financial ,crimes ,enforcement     
,network1 the ,office of ,foreign       
,assets ,control1 the ,federal ,bureau  
of ,investigation1 the ,united ,states  
,secret ,service1 the ,national         
,institute of ,standards and            
,technology1 the ,cybersecurity and     
,infrastructure ,security ,agency1 and  
such other relevant agencies as         
determined by the ,secretary of the     
,treasury1 shall develop a              
public-private partnership program with 
decentralized finance services and      
relevant risk management experts to--   
7#a7 focus on decentralized finance     
applications and front-end user         
interfaces2  7#b7 consider integrating  
anti-money laundering1 identity         
verification1 sanctions1 and            
cybersecurity controls and other        
technological solutions into            
decentralized smart contracts prior to  
deployment on a public blockchain       
network2  7#c7 test the capabilities of 

such integrated controls in             
decentralized smart contracts2  7#d7    
consider establishing a regulatory      
gateway to external1 verifiable data    
inputs and outputs that are capable of  
upgrading smart contract behavior after 
it has been deployed2 and  7#e7 provide 
legislative and regulatory              
recommendations related to integrated   
compliance mechanisms for decentralized 
finance services4  7b7 ,prohibition on  
certain participants ,participants      
selected for the public-private         
partnership program required under      
subsection 7a7 shall not include a      
decentralized finance service owned or  
controlled1 directly or indirectly1 by a
 covered person4  7c7 ,sunset ,the      
public-private partnership program      
developed under subsection 7a7 shall    
terminate #ah months after the date of  
enactment of this ,act4  7d7 ,rule of   
construction ,nothing in subsection 7a7 
shall be construed to limit1 impair1 or 
otherwise affect the supervisory1       

regulatory1 or enforcement authority or 
the jurisdiction of the agencies        
described in subsection 7a7 under any   
applicable law4  7e7 ,interagency       
coordination ,the ,secretary of the     
,treasury shall share the               
recommendations provided pursuant to    
subsection 7a77#e7 with other           
appropriate agencies1 and such agencies 
shall take the recommendations into     
account when issuing rules or carrying  
out supervisory functions4  #d4         
,fin,c,e,n advisory ,not later than #ah 
months after the date of enactment of   
this ,act1 the ,financial ,crimes       
,enforcement ,network shall publish an  
advisory related to the responsible     
development1 deployment1 and ongoing    
operation of decentralized finance      
services on a public blockchain network 
for the purposes of strengthening       
compliance with the ,bank ,secrecy ,act4
  #e4 ,rulemaking to modernize and      
strengthen ,bank ,secrecy ,act          
requirements for decentralized finance  

services ,not later than #cj months     
after the date of enactment of this     
,act1 the ,secretary of the ,treasury   
shall issue a rule to--  7#a7 further   
define the terms decentralized finance  
service and decentralized smart         
contract2 and  7#b7 expressly require   
that a decentralized finance service    
implements and maintains--  7,a7 a      
risk-based anti-money laundering program
 that meets the requirements under the  
,bank ,secrecy ,act2 and  7,b7 a        
risk-based sanctions compliance program4
  #f4 ,definitions ,in this ,act3 7#a7  
,bank ,secrecy ,act ,the term ,bank     
,secrecy ,act means--  7,a7 section #ba 
of the ,federal ,deposit ,insurance ,act
 7#ab ,u4,s4,c4 #ahbi;b72  7,b7 chapter 
#b of title ,i of ,public ,law #ia-ejh  
7#ab ,u4,s4,c4 #aiea et seq472 and  7,c7
 subchapter ,,ii of chapter #ec of title
 #ca1 ,united ,states ,code4  7#b7      
,covered person ,the term covered person
 means--  7,a7 the ,president2  7,b7 the
 ,vice ,president2  7,c7 a ,member of   

,congress2  7,d7 a senior executive     
branch employee2 or  7,e7 the spouse1   
child1 son-in-law1 or daughter-in-law1  
as determined under applicable common   
law1 of any individual described in     
subparagraph 7,a71 7,b71 7,c71 or 7,d74 
7#c7 ,decentralized finance service ,the
 term decentralized finance service     
means a protocol1 application1 or       
service that1 through the use of        
decentralized smart contracts deployed  
on a public blockchain network1         
facilitates digital asset transactions  
or the exchange of digital assets for   
other digital assets or fiat currency   
and may include--  7,a7 a peer-to-peer  
digital asset trading platform2  7,b7 a 
digital asset lending protocol2  7,c7 a 
digital asset staking or liquidity      
service2  7,d7 a digital asset mixing   
service2  7,e7 a cross-chain bridge     
service provider2 or  7,f7 any other    
decentralized finance service determined
 by the ,secretary of the ,treasury4    
7#d7 ,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 met4  7#e7   
,public blockchain network ,the term    
public blockchain network means an open 
source1 decentralized1 permissionless   
distributed ledger system that records  
digital asset transactions4  7#f7 ,risk 
management expert ,the term risk        
management expert means a person or     
entity with specialized knowledge or    
expertise in identifying1 preventing1   
and managing illicit finance1           
cybersecurity1 or compliance risks      
associated with decentralized finance   
services1 and may include-- 7,a7 an     
identity verification software provider2
  7,b7 a fraud detection service2  7,c7 
a blockchain analytics firm2  7,d7 a    
smart contract auditor2  7,e7 a         
blockchain oracle service2  7,f7 a      
blockchain cybersecurity service2 and   
7,g7 any other relevant risk management 

experts as determined by the ,secretary 
of the ,treasury4  7#g7 ,senior         
executive branch employee ,the term     
senior executive branch employee means  
an executive branch employee-- 7,a7 who 
is employed in a position listed in     
section #ecab of title #e1 ,united      
,states ,code1 or for which the rate of 
pay is equal to the rate of pay payable 
for level ,i of the ,executive          
,schedule2  7,b7 who is employed in a   
position-- 7i7 in the ,executive ,office
 of the ,president2 and  7ii7 listed in 
section #ecac of title #e1 ,united      
,states ,code1 or for which the rate of 
pay is equal to the rate of pay payable 
for level ,,ii of the ,executive        
,schedule2  7,c7 who is appointed by the
 ,president pursuant to section         
#aje7;a77#b77;,a7 of title #c1 ,united  
,states ,code2 or  7,d7 who is appointed
 by the ,vice ,president pursuant to    
section #ajf7;a77#a77;,a7 of title #c1  
,united ,states ,code4