House subcommittee modernizes Bank Secrecy Act amid crypto surge
In brief
- House subcommittee heard testimony Thursday on modernizing the 1970 Bank Secrecy Act amid rising financial crime.
- North Korea stole $2.6 billion in digital assets since early 2025, with AI scams surging 500%.
- Crypto firms and civil liberties groups push to refocus reporting on actionable intelligence rather than volume.
The threat landscape
TRM Labs Global Head of Policy Ari Redbord laid out the scale of the challenge. North Korea stole over $2 billion in digital assets in 2025 and another $600 million in early 2026. Pig butchering networks stripped more than $35 billion from Americans in the past year. AI-enabled scam activity surged 500% over the past year.
The speed of illicit movement compounds the problem. Illicit funds now move across wallets within 24 to 48 hours, compressing response windows. Yet institutions file nearly 5 million suspicious activity reports and 21 million currency transaction reports annually. The volume doesn't match the velocity of modern threats.
Competing visions for reform
Subcommittee Chairman Warren Davidson (R-OH) opened by calling the BSA a "bloated surveillance machine demanding endless reports without delivering proportional results." He signaled openness to scaling back the regime.
Redbord offered a middle path. He pitched formal recognition for stablecoin financial intelligence units like T3 FCU, a Tether–TRON–TRM collaboration that has frozen over $450 million in illicit USDT since September 2024. He also proposed a "digital asset hold law" giving exchanges a statutory safe harbor to freeze suspect funds pending law enforcement review.
But not everyone wanted reform. Cato Institute researcher Nicholas Anthony said the problem with BSA was surveillance itself, noting that the history of financial surveillance has been a history of ever-moving goalposts. Civil liberties groups echoed that concern.
John Court, general counsel at the Bank Policy Institute, backed reform rather than repeal. He urged higher reporting thresholds, simpler filings, risk-based oversight, and explicit approval for banks to use AI in transaction monitoring. Crypto firms, banks, and civil liberties groups are pushing to refocus the BSA on actionable intelligence over reporting volume.
The divide reflects a deeper tension: whether modernization means trimming the law or weaponizing it more smartly. The Trump administration is broadening its reach over non-citizen customers, which may push the debate toward tighter controls, not looser ones.