Financial Surveillance Law Faces Scrutiny Amid Crypto Expansion

A growing chorus of lawmakers, legal experts, and digital rights advocates is calling for a comprehensive overhaul of the Bank Secrecy Act , contending that its extensive financial surveillance provisions infringe upon constitutional rights and hinder the advancement of cryptocurrency technologies.

Enacted in 1970, the BSA mandates that financial institutions report specific transactions to the federal government, aiming to combat money laundering and other illicit activities. However, critics argue that the law’s expansive reach has led to mass surveillance practices that conflict with the Fourth Amendment’s protections against unreasonable searches and seizures.

In 2023, approximately 300,000 financial institutions filed nearly 30 million BSA reports, yet only about 1,575 cases were referred for prosecution based on these filings. This disparity has raised concerns about the efficacy and proportionality of the BSA’s reporting requirements.

The rise of cryptocurrencies has intensified these debates. Digital assets, by their nature, offer users a degree of privacy and autonomy in financial transactions. However, the BSA’s current framework does not adequately address the nuances of blockchain technology, leading to calls for reforms that balance regulatory oversight with individual privacy rights.

President Donald Trump’s administration has signaled a shift in approach. In January 2025, an executive order titled “Strengthening American Leadership in Digital Financial Technology” was issued, emphasizing the promotion of digital assets and blockchain technologies. The order established the Presidential Working Group on Digital Asset Markets, tasked with developing a federal regulatory framework for digital assets and evaluating the creation of a national digital asset stockpile. Notably, the order also prohibited the establishment of central bank digital currencies , citing concerns over financial stability and individual privacy.

Despite these initiatives, critics argue that without substantive reforms to the BSA, the executive order’s goals may be undermined. They contend that the BSA’s current provisions allow for warrantless access to individuals’ financial records, a practice they believe is incompatible with constitutional protections.

Legal precedents have further complicated the landscape. In the 1976 case United States v. Miller, the Supreme Court held that individuals do not have a reasonable expectation of privacy in financial records held by third parties. This “third-party doctrine” has been a cornerstone in upholding the BSA’s provisions. However, more recent decisions, such as Carpenter v. United States in 2018, have begun to challenge the breadth of this doctrine, particularly in the context of digital data.

Advocates for reform suggest that Congress could amend the BSA to maintain its record-keeping requirements while eliminating or modifying its reporting mandates. Such changes would ensure that law enforcement agencies obtain warrants based on probable cause before accessing individuals’ financial information, thereby aligning the law with Fourth Amendment protections.

Some legislative efforts have been initiated. In the 118th Congress, Representative John Rose introduced the Bank Privacy Reform Act, aiming to reaffirm Americans’ Fourth Amendment rights in the context of financial transactions. Similarly, Senator Mike Lee proposed the Saving Privacy Act, which seeks to address concerns over mass financial surveillance. However, these bills have yet to gain significant traction.