FinCEN Drops Two Controversial Crypto Regulation Proposals
The Financial Crimes Enforcement Network (FinCEN) has abandoned two regulatory proposals targeting cryptocurrency transactions. The agency withdrew a 2023 proposal that would have classified crypto mixing as a primary money laundering threat and a 2020 proposal requiring identity verification for self-custody wallet transfers. FinCEN acknowledged that the mixing rule's broad definition risked penalizing lawful privacy seekers.
The 2023 proposal aimed to monitor mixing activities, including fund aggregation and transaction fragmentation, but faced criticism for its overly expansive scope. The 2020 proposal would have required financial institutions to verify identities for transfers exceeding $3,000 and report transactions over $10,000. FinCEN stated the withdrawals align with the current administration's push for deregulation.
Industry groups like Coin Center praised the decision, arguing the mixing proposal could have impacted standard privacy techniques. The Crypto Council for Innovation also welcomed the move, calling it a positive step for the digital asset sector. Neither proposal was finalized, so existing regulations remain unchanged.
The announcement comes amid other regulatory shifts, including the Treasury Department's removal of Tornado Cash from its sanctions roster in March 2025. A recent Treasury analysis recognized that mixers can serve valid privacy objectives.