FinCEN withdraws crypto wallet and mixer reporting proposals
The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) has withdrawn two long-pending cryptocurrency proposals, ending a rulemaking process that began in 2020. On October 5, FinCEN dropped proposed reporting requirements for certain self-custody wallet transactions and a separate surveillance framework for cryptocurrency mixing. The agency cited public comments and efforts to tailor digital-asset regulation as reasons for the withdrawals, though existing Bank Secrecy Act obligations remain in place.
The first proposal, introduced on December 23, 2020, aimed to establish recordkeeping, verification, and reporting requirements for transactions involving unhosted wallets or wallets in jurisdictions identified by FinCEN. It would have required banks and money services businesses to report transactions exceeding $10,000 and keep records for transactions above $3,000. FinCEN had received over 7,500 public comments on the proposal before withdrawing it.
The second withdrawal concerned a proposal from October 2023 targeting cryptocurrency mixers. The proposal would have required financial institutions to report transactions suspected of involving international crypto mixing, including transaction amounts, wallet addresses, and customer identification data. FinCEN acknowledged concerns about the broad definition of mixing, which could have affected legitimate activities and imposed significant reporting burdens. Despite the withdrawal, FinCEN emphasized its continued monitoring of mixer activity for illicit financial risks.
The withdrawals align with recommendations from the President’s Working Group on Digital Asset Markets, which urged the Treasury to reconsider the mixer proposal and clarify Bank Secrecy Act obligations for digital assets. However, the administration has not eliminated anti-money-laundering controls for digital assets, as FinCEN continues to propose new rules for stablecoin issuers and sanctions-evasion networks. Future enforcement guidance and targeted proposals remain potential regulatory markers for U.S. Treasury news.