FinCEN Withdraws Crypto Wallet and Mixer Reporting Proposals

The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) has withdrawn two proposals aimed at regulating private crypto wallets and mixing transactions. The first proposal, introduced in December 2020, would have required financial firms to report certain crypto transfers involving self-custody wallets that exceeded USD 10,000. The second proposal, from October 2023, sought additional reporting on international crypto mixing activities. Both measures were officially withdrawn on October 5.

The wallet proposal targeted transfers, deposits, withdrawals, and exchanges involving banks or money services businesses, including crypto exchanges. Under the plan, firms would have reported transactions exceeding USD 10,000 to FinCEN, along with customer and counterparty information. A separate threshold required recordkeeping for transactions above USD 3,000. The proposal also covered certain wallets held at foreign financial institutions outside Bank Secrecy Act requirements.

The crypto mixer proposal aimed to enhance reporting when financial institutions suspected transactions involved international mixing. Mixing combines or rearranges transfers, making them harder to trace. The proposal defined mixing broadly, including pooling funds, splitting transfers, using temporary wallet addresses, and delaying transactions. FinCEN cited concerns about the definition’s reach and firms’ reporting workload as reasons for withdrawal.

FinCEN stated that it reviewed public comments before withdrawing both measures. The agency linked its decision to the Trump administration’s 'deregulatory agenda' and efforts to make digital-asset regulations 'fit-for-purpose.' The withdrawals do not remove existing requirements for financial institutions but end efforts to introduce additional obligations for wallet transfers and mixing transactions. FinCEN will continue monitoring mixers for illegal financial activity and may take further steps in the future.