Treasury withdraws self-custody wallet and crypto mixer regulations

The U.S. Treasury has abandoned two controversial proposals related to cryptocurrency self-custody wallets and mixing services, marking a significant shift in regulatory approach under the Trump administration. On October 5, 2026, the Financial Crimes Enforcement Network (FinCEN) announced the withdrawal of both proposals, ending years of uncertainty for the crypto industry.

The first proposal, introduced in December 2020, aimed to impose record-keeping and reporting requirements for transactions involving unhosted wallets. It would have required banks and money service businesses to track transactions above $3,000 and report those exceeding $10,000. The second proposal, introduced in 2023, targeted crypto mixing services, seeking to classify them as a primary money laundering concern.

The decision to withdraw these proposals has been met with approval from crypto industry groups, which had strongly opposed the regulations. The Digital Chamber welcomed the move, stating that it removes regulatory pressure around self-custodial wallets. FinCEN noted that the withdrawal aligns with the administration’s goal of creating 'fit-for-purpose' digital asset regulations.

With the proposals withdrawn, there are no new federal requirements forcing financial institutions to identify the owners of self-hosted wallets. However, existing anti-money laundering (AML) and financial rules remain in place, leaving the crypto industry without the additional reporting frameworks proposed earlier.