FinCEN withdraws proposed surveillance rules for unhosted crypto wallets and mixers
The U.S. Treasury's Financial Crimes Enforcement Network has officially withdrawn two long-pending regulatory proposals that would have mandated strict reporting on unhosted crypto wallets and cryptocurrency mixing.
The Financial Crimes Enforcement Network formally filed notices to withdraw two proposed rulemakings that sought to expand federal surveillance over self-custodial crypto wallets and cryptocurrency mixing services. Neither proposal ever took effect, and both formal withdrawal notices were scheduled for publication in the Federal Register on Oct. 6, 2026, officially closing both proceedings.[1][4][5][7]
The first proposal, introduced in December 2020, would have required banks and money services businesses to verify customer identities and report transactions exceeding $10,000 involving unhosted wallets, as well as keep records for transfers topping $3,000. The second proposal, introduced in 2023 under Section 311 of the USA PATRIOT Act, classified international crypto mixing as a primary money laundering concern and would have forced covered institutions to report mixing-linked transactions involving foreign jurisdictions, including wallet addresses, transaction hashes, and IP addresses.[4][5][9]
Both withdrawal notices were signed by FinCEN Deputy Director Jimmy L. Kirby and cited a July 2025 report from the President's Working Group on Digital Asset Markets, which noted that the administration supports the ability of lawful users to privately transact on public blockchains. FinCEN highlighted public comments warning that an expansive mixing definition could chill legitimate activity and impose excessive compliance burdens. Policy group Coin Center hailed the move as a victory for financial privacy, though FinCEN noted that existing anti-money-laundering requirements, customer checks, and suspicious activity reporting remain fully operational.[2][4][5][8]
Key facts
- FinCEN filed formal notices withdrawing two proposals targeting unhosted crypto wallets and cryptocurrency mixing services.
- The withdrawn December 2020 proposal would have required financial institutions to record unhosted wallet transactions over $3,000 and report those over $10,000.
- The withdrawn 2023 proposal sought to classify international crypto mixing as a primary money laundering concern under Section 311 of the USA PATRIOT Act.
- FinCEN stated that the mixer proposal was withdrawn partly because public feedback warned its broad definition could chill legitimate activity and burden institutions.
- Both notices were signed by FinCEN Deputy Director Jimmy L. Kirby and cited a July 2025 administration report backing lawful private transactions on public blockchains.
- Existing regulatory obligations—including money transmitter registration, customer verification, suspicious activity reporting, and the Funds Travel Rule—remain unchanged.
Sources · 10 sources
- CO
CoindeskArticle ·
U.S. scraps proposed $10,000 reporting rule for for crypto sent to private wallets FinCEN withdrew two proposals that had hung over self-custody and crypto mixers for years without ever taking effect.
Open source - LS
Laura Shin@laurashinPost on X ·
In pulling its crypto mixer proposal, FinCEN pointed to commenters' concerns that the rule's broad definition of mixing "could have a chilling effect on legitimate activity." https://t.co/kF2tmZbJMB
Open source - TW
The Wolf Of All Streets@scottmelkerPost on X ·
JUST IN: 🇺🇸 FINCEN WITHDRAWS 2020 UNHOSTED WALLET NPRM AND 2023 CVC MIXING SPECIAL MEASURE, CITING TRUMP ADMIN EO 14178 EFFORTS FOR FIT-FOR-PURPOSE DIGITAL ASSET RULES AND SUPPORT FOR LAWFUL PRIVATE TRANSACTIONS ON PUBLIC BLOCKCHAINS WILL TAKE NO FURTHER ACTION
Open source - UN
UnchainedArticle ·
FinCEN Withdraws Proposed Crypto Mixer and Unhosted Wallet Reporting Rules The Financial Crimes Enforcement Network (FinCEN) is withdrawing two proposed crypto rules that would have required banks and other financial institutions, including crypto exchanges, to collect and report more data on transactions tied to crypto mixers and self-custodied wallets . The Treasury bureau filed both notices on Monday, and they are scheduled to be published in the Federal Register on Oct. 6. The first notice withdraws FinCEN’s 2023 finding that international crypto mixing is “a class of transactions of primary money laundering concern” under Section 311 of the USA PATRIOT Act , and the rule it proposed with it. Covered financial institutions would have had to report mixing-linked transactions involving a foreign jurisdiction, with details such as wallet addresses, transaction hashes and IP addresses, and keep identity records on the customers involved. The second notice formally pulls a December 2020 proposal aimed at “unhosted wallets.” Banks and money services businesses would have had to file a report with FinCEN when a customer’s transaction with such a wallet topped $10,000 , or when several added up to more than that within 24 hours, and keep records on those above $3,000 . “FinCEN will take no further action on this NPRM,” the notice said. Get Unchained’s crypto news in your inbox with the free Unchained Daily newsletter . White House Report Cited Both notices point to the July 2025 report from the President’s Working Group on Digital Asset Markets . The mixer withdrawal quotes its line that “the Trump Administration supports the ability of lawful users of digital assets to privately transact on a public blockchain.” The agency kept its concerns about mixers, saying criminals still use them to slow down investigators. But it said the withdrawal reflected commenters’ warnings that the rule defined mixing so broadly it “could have a chilling effect on legitimate activity and place a large reporting burden on covered financial institutions.” Both notices were signed by FinCEN Deputy Director Jimmy L. Kirby . Formal End to a Shelved Rule Treasury’s regulatory agenda had already listed the unhosted wallet proposal as withdrawn as of April 12, 2024, Unchained reported that year. Monday’s filing is the formal withdrawal notice. Coin Center , the crypto policy group that filed comments against both proposals, called the move “a significant victory for financial privacy” in a post by Jason Somensatto . Somensatto argued the rules were still a risk as long as Treasury hadn’t formally dropped them. “Their official withdrawal finally closes that door,” he wrote. The group also fought Treasury’s sanctions on mixer Tornado Cash, a case that ended in July 2025 when the department dropped its appeal. FinCEN said in the mixer notice that it would still track mixer use for illicit finance and “may take appropriate steps in the future to mitigate any such activity.” Related Listen: The Chopping Block: Erik Voorhees on AI Privacy, Agentic Payments, and Crypto x Memecoin Mayhem The post FinCEN Withdraws Proposed Crypto Mixer and Unhosted Wallet Reporting Rules appeared first on Unchained .
Open source - CR
CryptoSlateArticle ·
FinCEN drops crypto mixing proposal as backlash kills rule US Treasury’s Financial Crimes Enforcement Network (FinCEN) announced on Oct. 5 that it is withdrawing a reporting proposal for crypto mixing, the use of techniques that obscure a transaction’s source, destination, or amount. The plan reached beyond dedicated mixing services and would have required financial institutions to report information about covered transactions and their customers. The agency is withdrawing both its 2023 finding that international crypto mixing is a class of transactions of primary money laundering concern and the proposed recordkeeping and reporting rule. The withdrawal notice lists Oct. 6 as its scheduled Federal Register publication date and states that withdrawal will take effect upon publication. FinCEN cited commenters’ concerns that the expansive definition could chill legitimate activity and impose a large reporting burden. The proposed definition applied regardless of the protocol or service used. Examples included pooling funds, coordinating transactions with code, splitting transfers, routing funds through a series of single-use wallets, exchanging between crypto assets, and introducing user-initiated delays. The proposed obligation applied when a covered domestic financial institution knew, suspected or had reason to suspect that a crypto transaction by, through or to it involved mixing within or involving a jurisdiction outside the US. FinCEN dropped an unimplemented crypto-mixing reporting plan, while existing transmitter, transfer, and suspicious-activity rules remain. The definition also excluded certain internal processes used to execute transactions at banks, broker-dealers and money services businesses, provided they retained source and destination records and supplied them when legally required. For wallet users, the proposed privacy exposure came through institutions’ reports. These would have included wallet addresses, transaction hashes, IP addresses, and customer identity information in the institution’s possession. Institutions would also have had to document compliance. Related Reading Zcash and privacy protocols face a “do-or-die” SEC meeting that determines if developers are personally liable for code Compliance checks remain Under FinCEN’s existing guidance , covered crypto money transmitters remain subject to registration, risk-based anti-money-laundering programs, applicable customer checks, recordkeeping and suspicious activity reporting. Qualifying transfers also remain subject to the Funds Travel Rule. The guidance distinguishes an anonymizing service that accepts and retransmits value from a supplier of anonymizing software. Supplying a tool alone does not make someone a money transmitter, although operating a transmission business can. An unhosted-wallet user paying for goods or services on their own behalf is not a money transmitter on that basis. FinCEN’s announcement also covers the separate unhosted-wallet proposal published in December 2020. That proposal was already listed as withdrawn on April 12, 2024, in the Spring 2024 regulatory agenda . The new notice says the agency will take no further action. FinCEN says it will continue monitoring crypto mixing for money laundering, terrorist financing, and other illicit activity, and may take further steps. Financial institutions’ existing obligations remain relevant when assessing privacy-related transactions. The post FinCEN drops crypto mixing proposal as backlash kills rule appeared first on CryptoSlate .
Open source - CO
CoinMarketCap@CoinMarketCapPost on X ·
📰 CoinMarketCap | Top News 📰 19 stories on the front page right now. 🔹 FinCEN withdraws wallet and crypto mixing rules, obligations unchanged 🔹 SEC approves Cboe rule for first U.S. 3x BTC, ETH ETFs, pending registration 🔹 OKX, ICE notify SEC of planned 24/7 X Layer tokenized stock venue Read every story here 👇 https://t.co/ep7SrL7RMe
Open source - *B
*Walter Bloomberg@DeItaonePost on X ·
TREASURY WITHDRAWS TWO CONTROVERSIAL CRYPTO SURVEILLANCE PROPOSALS The U.S. Treasury has withdrawn two long-pending FinCEN proposals targeting unhosted crypto wallets and cryptocurrency mixing. The wallet proposal would have imposed reporting and recordkeeping requirements on certain transactions above $3,000 and $10,000, while the mixing proposal sought expanded reporting for transactions potentially involving foreign crypto mixers. The withdrawals formally end both proposed rulemakings.
Open source - TB
The Block@TheBlockCoPost on X ·
THE BLOCK: Treasury's FinCEN is withdrawing a 2023 proposal that would have designated international crypto mixing a "primary money laundering concern," citing concerns the rule could have "a chilling effect on legitimate activity." https://t.co/UxmeLtXV3F
Open source - WB
Wu Blockchain@WuBlockchainPost on X ·
U.S. Treasury Withdraws Proposed Reporting Rules for Unhosted Crypto Wallets The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) has withdrawn a 2020 proposal that would have imposed reporting and recordkeeping requirements on certain transactions involving unhosted crypto wallets, saying it will take no further action on the proposal. The rule would have required banks and money services businesses (MSBs) to report transactions exceeding $10,000 involving unhosted or certain covered wallets and verify customer identities, while transactions above $3,000 would have been subject to recordkeeping requirements. FinCEN said the withdrawal is part of the Trump administration’s efforts to ensure di gital asset regulations are “fit-for-purpose.”
Open source - CR
CryptoSlate@CryptoSlatePost on X ·
FinCEN is withdrawing its never-implemented crypto-mixing reporting proposal. The definition reached beyond dedicated mixers. Existing AML duties still apply to covered crypto transmitters. Reporting by @akibablade. https://t.co/Wrvc6a0kIc
Open source