Two proposals that would have added obligations for financial institutions have been withdrawn. FinCEN cited concerns that its broad mixing definition could also capture legitimate activity.
The US Financial Crimes Enforcement Network (FinCEN) has withdrawn two proposals that would have added recordkeeping and reporting requirements for transactions involving self-hosted crypto wallets and cryptocurrency mixing. The agency’s October 5 announcement closes off two rulemaking efforts that had been pending for years.
In its official announcement, FinCEN tied the decision to public comments and the Trump administration’s effort to reduce regulatory burdens. Both withdrawal notices carry an October 6, 2026 publication date. The original proposals were published on December 23, 2020 and October 23, 2023, respectively.
What the wallet proposal would have required
The 2020 proposal covered transactions involving wallets that do not require a financial institution to carry out a transfer. Users who control their own keys hold assets differently from customers whose exchange keeps custody for them. The proposal also covered certain wallets held by institutions in foreign jurisdictions identified by FinCEN.
The obligations would have fallen on banks and money services businesses involved in the transactions, rather than on wallet software itself. When a counterparty used a covered wallet, transactions above $3,000 would have triggered recordkeeping and verification of the institution’s customer. Transactions above $10,000, including multiple transactions exceeding that total within 24 hours, would also have required a report to FinCEN.
The wallet withdrawal notice states plainly that the agency will not pursue that notice of proposed rulemaking (NPRM):
“FinCEN will take no further action on this NPRM.”
Those thresholds belonged to the withdrawn proposal. They should not be read as a complete account of today’s crypto transfer rules or of the customer checks banks already carry out.
Broad mixing definition drew objections
The second proposal, from 2023, concerned crypto mixing within or involving jurisdictions outside the United States. Mixing services can make it harder to trace the connection between a transaction’s source and destination. FinCEN had designated that class of transactions a primary money laundering concern and proposed extra recordkeeping and reporting for covered financial institutions.
In the mixing withdrawal notice, FinCEN cites objections that its broad definition could discourage legitimate activity and create a heavy reporting burden. The agency is withdrawing both its finding about the transaction class and the special measure proposed on that basis.
The industry group Crypto Council for Innovation (CCI) welcomed the decision on October 5. It recalled that its own comment letter had warned that the broad definition could capture legitimate activity. CCI’s response reflects the position of an industry participant in the consultation process.
CCI’s October 5 response to the mixing proposal’s withdrawal
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Withdrawal does not end oversight. FinCEN maintains that mixers can be used for illicit purposes. It says it will continue monitoring for signs of money laundering and terrorist financing, and may take further action where necessary.
