The Bank Secrecy Act (BSA) is a U.S. law aimed at preventing money laundering and increasing the transparency of financial transactions. It requires financial institutions, including cryptocurrency exchanges and wallet providers, to implement measures to detect and report suspicious activities.

Under the BSA, these entities must register with the Financial Crimes Enforcement Network (FinCEN) and create anti-money laundering (AML) programs. This involves identity verification of customers and monitoring transactions for unusual patterns that could indicate illegal activities. Failure to comply with BSA requirements can lead to significant penalties for cryptocurrency businesses, affecting their operations and credibility.

By enforcing these regulations, the BSA seeks to ensure that the evolving landscape of finance, including digital currencies, adheres to the same accountability standards as traditional financial systems. In essence, the BSA plays a crucial role in shaping how cryptocurrencies are regulated, promoting legitimacy and security in their use.