FinCEN abandons crypto mixing reporting proposal amid backlash

The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) has abandoned a proposed rule that would have required financial institutions to report crypto-mixing transactions. The proposal, which was never implemented, would have covered a broad range of activities designed to obscure transaction details, such as pooling funds or routing them through multiple wallets.

FinCEN cited concerns from commenters that the proposal’s broad definition could have stifled legitimate crypto activities and imposed excessive reporting burdens. The agency withdrew both the proposal and its 2023 finding that international crypto mixing posed a significant money laundering risk. The withdrawal takes effect upon publication in the Federal Register on October 6, 2026.

While the mixing reporting requirement is dropped, existing anti-money-laundering obligations for crypto money transmitters remain in place. These include registration, risk-based AML programs, recordkeeping, and suspicious activity reporting. The Funds Travel Rule, which applies to certain transfers, also continues to be enforced.

FinCEN clarified that supplying anonymizing software alone does not make someone a money transmitter, but operating a transmission business does. The agency also confirmed that it will no longer pursue a separate proposal related to unhosted wallets, which was withdrawn in April 2024. FinCEN emphasized that it will continue monitoring crypto mixing for illicit activities and may take further action in the future.