Treasury and Department of Justice Release Recommendations on Digital Asset Regulation

In September, the Department of the Treasury and the Justice Department (DOJ) released reports outlining the agencies’ respective legislative, regulatory, and policy recommendations and priorities on the regulation of digital assets. These recommendations come as a result of the Biden Administration’s Executive Order 14067 which mandated multiple agency-lead reports on six principal themes, which included mitigating illicit finance and national security risks posed by the misuse of digital assets.

The DOJ report offers specific changes to laws and regulations that would expand the scope of the Bank Secrecy Act (BSA), extend BSA requirements to non-fungible tokens (NFTs), clarify the application of existing laws to virtual asset service providers, and toughen penalties for violations of those laws. The Treasury Department’s report includes proposing an increased emphasis on monitoring risks, working with international partners to improve cooperation on and implementation of international AML standards, strengthening U.S. AML regulations and operational frameworks, and improving private sector compliance and information sharing. Treasury also released a request for comment to gather feedback on the illicit finance and national security risks posed by digital assets with comments due November 3.

Click here to read the DOJ report “The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets.”

Click here to read the Treasury report “Action Plan to Address Illicit Financing Risks of Digital Assets.”

Click here to read a Davis Polk client alert covering both the Treasury and DOJ recommendations on digital assets.