Cryptocurrency is becoming more popular in the United States every year. Millions of people now use digital assets to invest, trade and transfer money. But at the same time, the number of federal investigators checking whether crypto companies are stopping money laundering has dropped sharply.
According to federal data obtained by the International Consortium of Investigative Journalists (ICIJ), the number of IRS examiners reviewing anti-money laundering safeguards fell to its lowest level since at least 2017.
This decline is raising serious concerns among experts who say weaker oversight could make the financial system more vulnerable to illegal activity.
IRS Oversight of Cryptocurrency Is Shrinking
The Internal Revenue Service is responsible for supervising anti-money laundering protections at cryptocurrency exchanges and other money services businesses (MSBs). These include companies that allow users to buy, trade and convert cryptocurrency into regular cash.
In 2025, only 139 IRS agents were assigned to examine anti-money laundering systems at crypto firms and similar nonbank financial institutions. That number is down 33% from 208 agents in 2024. It is also the lowest level recorded in data going back to 2017.
Even before these reductions, the IRS had difficulty keeping up with the fast-growing crypto industry. As digital asset platforms now handle trillions of dollars in transactions every year, fewer investigators are available to monitor potential misuse.
Crypto Exchanges and Money Laundering Risks
Cryptocurrency exchanges act as entry and exit points for digital money. Users can:
- Buy and sell cryptocurrencies
- Transfer funds globally
- Convert crypto into traditional currency
Because of this, exchanges can become attractive tools for money launderers who want to move funds quickly and anonymously.
US regulators classify crypto exchanges in the same category as money services businesses, similar to traditional companies like Western Union. However, experts say oversight of crypto firms is not as strong as oversight of major banks.
Warnings From Experts
Erica Hanichak from the FACT Coalition said that the reduction in IRS supervisory staff matches a broader trend across anti-money laundering agencies. She warned that cutting oversight could send the message that the US is open to dirty money.
Compliance specialist Christina Rea also expressed concern. She explained that while the crypto sector has grown rapidly in size and complexity, examiner resources have decreased instead of increasing.
According to Alison Jimenez, an anti-money laundering expert, crypto firms are sometimes larger than many traditional banks but do not receive the same level of examination. She warned that fewer investigators may allow serious compliance problems to go undetected for longer periods.
Past Investigations and Global Concerns
In 2025, ICIJ’s investigation called The Coin Laundry examined how cryptocurrency was used in global money laundering schemes. The investigation found that Cambodia-based Huione Group, which US authorities flagged as a major money laundering concern, continued sending large sums of cryptocurrency to major exchanges such as Binance and OKX.
These fund transfers reportedly continued even after US authorities identified weaknesses in anti-money laundering procedures at some platforms.
Such findings highlight the importance of strong monitoring systems and well-funded enforcement teams.
Policy Changes and Budget Cuts
In 2022, Congress approved billions of dollars in new funding to modernize the IRS and strengthen enforcement. However, later political decisions reversed much of that funding. Staff expansion efforts were slowed or stopped, and enforcement units were reduced.
In April, the administration also disbanded a Justice Department unit focused on crypto-related crimes. While officials said they would continue targeting illegal financing activities, enforcement actions against platforms themselves were reduced.
These moves have sparked debate about whether the US is relaxing oversight too quickly while the crypto market continues to grow.
Why Fewer Examiners Could Be Risky
Anti-money laundering examinations are detailed and time-consuming. Agents must review internal controls, transaction monitoring systems, and compliance procedures.
If examiner numbers decline while transaction volumes rise, several risks increase:
- Suspicious activity may go unnoticed
- Compliance failures may remain unresolved
- Larger financial scandals could develop
- Consumer trust may decline
Experts warn that crypto oversight already operates as a loosely connected system. With fewer resources, that system may weaken further.
The Bigger Picture for 2026
As cryptocurrency moves closer to mainstream finance, strong regulatory oversight becomes more important. The IRS and other agencies must balance innovation with security.
While most crypto companies operate legally, the system depends on effective safeguards to prevent misuse. Reducing the number of trained investigators during a period of rapid industry growth raises concerns about national security, financial integrity, and investor protection.
The future of cryptocurrency in the United States may depend not only on market performance but also on whether regulators can maintain strong and consistent oversight. As digital finance expands, the challenge will be ensuring that innovation does not outpace accountability.
FAQ
Q1. Why did IRS crypto investigators decline in 2025?
Federal data shows staffing reductions and funding changes contributed to fewer agents overseeing crypto firms.
Q2. What role does the IRS play in crypto regulation?
The IRS supervises anti-money laundering safeguards at cryptocurrency exchanges classified as money services businesses.
Q3. Does fewer oversight increase money laundering risk?
Experts warn that reduced examinations may allow compliance problems to go undetected.
Q4. Are crypto exchanges regulated like banks?
They are classified as money services businesses, but experts say oversight is generally lighter than for banks.
Q5. Why is crypto oversight important?
Strong oversight protects consumers, supports national security, and helps maintain trust in financial markets.
