FinCEN Withdraws Cryptocurrency Wallet and Mixing Regulations

The U.S. Financial Crimes Enforcement Network (FinCEN) has announced the withdrawal of two cryptocurrency-related regulatory proposals on October 5. The first proposal, introduced in December 2020 during the Trump administration, aimed to impose record-keeping, customer identification, and reporting requirements on transactions involving unhosted wallets (self-custody wallets) and certain foreign wallets. The second proposal, introduced in October 2023 under the Biden administration, designated cryptocurrency mixing as a 'primary money laundering concern' and proposed special measures for financial institutions.

FinCEN cited public comments and the administration's regulatory review efforts as reasons for the withdrawal. The agency also referenced a 2025 report by the White House's Presidential Working Group on Digital Asset Markets, which supported the ability of lawful digital asset users to conduct private transactions on public blockchains. Concerns were raised that the broad definition of mixing could stifle legitimate transactions and impose significant reporting burdens on financial institutions.

While FinCEN maintains that mixers are used to obstruct investigations, it will continue to monitor related activities for signs of money laundering, terrorist financing, and other financial crimes. The agency did not rule out future actions if necessary. The cryptocurrency policy organization Coin Center welcomed the withdrawal, though it noted that the legal authority to implement similar rules remains in place.