the CODE Act of 2025

The Compliant Operations of Decentralized Entities Act of 2025 (CODE Act) would require the Secretary of the Treasury, with key federal partners, to create a public-private partnership program aimed at evaluating and piloting innovative anti-money laundering (AML) solutions for decentralized finance (DeFi) services. The program would explore embedding AML, identity verification, sanctions, and cybersecurity controls into decentralized smart contracts before they are deployed on public blockchains, test these capabilities, and consider a regulatory gateway to external data inputs/outputs that could update contract behavior post-deployment. The bill also directs FinCEN to issue an advisory on responsible DeFi development and, within 30 months, to issue rulemakings to define DeFi services and mandatory risk-based AML and sanctions compliance. The act includes a sunset after 18 months for the PPP program and limits participation in the program for entities owned or controlled by a “covered person” (high-ranking government officials or their close relatives). Overall, the bill seeks to standardize and strengthen Bank Secrecy Act (BSA) compliance in DeFi through coordinated government-industry collaboration and regulatory guidance.