the CODE Act of 2025
Sponsored By: Representative Casten
Introduced
Summary
Integrating anti-money laundering, sanctions, identity verification, and cybersecurity controls into decentralized finance (DeFi) smart contracts. This bill would create a time-limited, Treasury-led public-private program to test pre-deployment controls, push FinCEN guidance, and require rules that apply Bank Secrecy Act standards to DeFi services.
Show full summary
- DeFi platforms and developers would face new compliance expectations. The bill would require rulemaking to define "decentralized finance service" and "decentralized smart contract" and would mandate risk-based anti-money laundering programs that meet Bank Secrecy Act standards and risk-based sanctions compliance, with a rulemaking due by 30 months.
- Private-sector risk management firms would be invited to join Treasury-led tests of integrated controls. The Secretary of the Treasury would set up the partnership within 6 months and the program would run for 18 months. Services owned or controlled by specified "covered persons" would be barred from participating.
- Regulators and law enforcement would get coordinated input and guidance. Treasury must consult Financial Crimes Enforcement Network, the Office of Foreign Assets Control, the FBI, the U.S. Secret Service, NIST, the Cybersecurity and Infrastructure Security Agency, and the Commodity Futures Trading Commission. FinCEN would also be directed to publish an advisory on responsible DeFi development within 18 months.
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Bill Overview
Analyzed Economic Effects
3 provisions identified: 1 benefits, 0 costs, 2 mixed.
Pilot program for decentralized finance rules
If enacted, Treasury would set up a short-term public‑private program within 6 months. It would test adding anti‑money laundering, identity checks, sanctions, and cybersecurity controls into smart contracts before they go live. It would also consider a secure data gateway to update contracts after launch. DeFi services owned or controlled by the President, Vice President, Members of Congress, certain senior officials, or their close family would be excluded. The program would end 18 months after enactment, and Treasury would share recommendations that other agencies would consider when making rules.
Stronger checks on decentralized finance services
If enacted, FinCEN would publish guidance within 18 months on how to build and run decentralized finance services that follow the Bank Secrecy Act. Treasury would issue a rule within 30 months to define what counts as a DeFi service and a decentralized smart contract. The rule would require DeFi services to keep risk‑based anti‑money‑laundering and sanctions programs. This could protect users, but it may add costs for providers that could affect fees or access.
Who is covered by decentralized finance rules
If enacted, the bill would define key terms used throughout. It would spell out who is a “covered person,” what counts as a decentralized finance service, and what a decentralized smart contract and public blockchain network are. Examples include trading platforms, lending, staking and liquidity services, mixers, and cross‑chain bridges. It would also define “risk management expert.” These definitions would decide who the other rules apply to.
Sponsors & CoSponsors
Sponsor
Casten
IL • D
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
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