Treasury Scraps Crypto Surveillance Plans in Win for Privacy Advocates

The U.S. Treasury Department has abandoned two controversial crypto surveillance proposals, marking a victory for privacy advocates and the digital asset industry. The Financial Crimes Enforcement Network (FinCEN) officially withdrew a 2020 rule targeting unhosted wallets and a 2023 plan to classify international crypto mixing as a primary money laundering concern. Both notices are set to publish in the Federal Register on Tuesday.

The unhosted wallet rule would have required banks to report transactions over $3,000 and $10,000 involving self-custodied crypto assets. Meanwhile, the mixing proposal took aim at any activity obscuring transaction details, including pooled funds, split transfers, and asset swaps. FinCEN acknowledged that the broad definition could stifle legitimate privacy practices and overwhelm institutions with compliance burdens.

Coin Center, a Washington-based crypto policy group, celebrated the reversal as a win for financial privacy. The organization had argued that the mixing rule’s vague scope could lead to unnecessary account restrictions for innocent users. The White House’s July 2025 report also supported the change, emphasizing the Trump Administration’s stance on lawful private transactions in crypto.

While FinCEN dropped the proposals, it stressed that mixers remain a tool for illicit actors. The agency pledged to continue monitoring for money laundering and terrorist financing, hinting at potential future actions.