I want to share with you the focus of our regulatory efforts over the next several months.

First, we are focused on Travel Rule compliance in the cryptocurrency sector. As you all know, the Travel Rule requires that information is collected about who—that is, the real-life person, not an online persona—is sending and receiving funds, and that this information is transmitted to all financial institutions involved in a payment. This information helps us enforce the Bank Secrecy Act and safeguard our national security.

While Travel Rule compliance creates additional reporting needs for some digital asset companies, we know that many of you are already doing this. This information is critical to our ability to defend America’s national security—we know too well the role that cryptocurrencies can play in financing the activities of our adversaries. We’re focused on arriving at a regulatory approach to the Travel Rule that will strike the right balance between allowing the market to continue innovating when it comes to payments systems and technologies, while also ensuring these innovations are not abused or used to undermine our shared interests. That balance, fundamentally, is what we are aiming to achieve.

Second, we are working to address the unique risks associated with unhosted wallets. Because unhosted wallets are effectively just addresses on a blockchain, it can be difficult to determine who really owns and controls them—creating opportunities to abuse this heightened anonymity. Fundamentally, financial institutions need to know who they are transacting and doing business with to make sure they are not making payments to criminals, sanctioned entities, or others. When it comes to unhosted wallets, we are working to provide them the information they need to avoid facilitating these kinds of illicit payments.