Treasury Withdraws Proposed Crypto Wallet and Mixer Reporting Rules
The U.S. Treasury Department has withdrawn two proposed cryptocurrency reporting rules, providing relief to crypto businesses and users. The Financial Crimes Enforcement Network (FinCEN) confirmed the withdrawal of proposals targeting self-hosted wallet transactions and mixer services. These changes, effective upon publication in the Federal Register on October 6, simplify compliance requirements for regulated institutions.
The first proposal, introduced in 2020, required firms to collect and retain counterparty information for transactions involving self-hosted wallets exceeding $3,000. Transactions over $10,000 would have triggered additional reporting obligations. Critics had highlighted the operational challenges of identifying external wallet owners, making the proposal difficult to enforce. With its withdrawal, firms no longer need to implement the proposed verification process.
The second proposal, introduced in 2023, focused on transactions involving virtual currency mixing linked to foreign jurisdictions. It aimed to require firms to report suspected mixing activity but did not ban mixing services outright. While the withdrawal eliminates this reporting requirement, existing anti-money laundering, sanctions compliance, and suspicious activity monitoring obligations remain in place.
For crypto businesses, the withdrawal means they no longer need to prepare for the proposed reporting systems. However, exchanges and other platforms may still request additional information, pause transactions, or impose restrictions based on risk assessments. The withdrawal does not alter broader compliance rules governing the crypto space, ensuring that existing regulatory expectations continue to apply.