FinCEN Drops 2020 Proposal on Crypto Wallet Recordkeeping Requirements
The U.S. Financial Crimes Enforcement Network (FinCEN) has withdrawn a proposed rule that would have required banks and money services businesses to keep records for certain crypto transactions involving unhosted wallets. The proposal, initially introduced in December 2020, would have mandated recordkeeping for transactions exceeding $3,000 and reporting for those above $10,000.
FinCEN announced the withdrawal in a Federal Register notice set to publish on October 6. The rule would have applied to transactions involving unhosted wallets and some wallets hosted by financial institutions in jurisdictions identified by FinCEN. It aimed to ensure banks and MSBs collected customer and counterparty information for qualifying transactions.
The decision aligns with the Trump administration’s digital asset regulatory policy, as outlined in a report from the President’s Working Group on Digital Asset Markets. FinCEN stated that withdrawing the proposal supports efforts to create regulations that are “fit-for-purpose” for digital assets.
Additionally, FinCEN withdrew another proposed rule concerning cryptocurrency mixing transactions, which sought to classify certain mixing activities as high-risk for money laundering. Both withdrawals followed public comments received during the rulemaking processes. The move ends a nearly six-year regulatory proposal that had remained unresolved.