Key Notes
- FinCEN announced the withdrawal of its 2020 wallet proposal and 2023 international-mixing proposal, with formal withdrawal scheduled for October 6.
- The wallet proposal would have required records above $3,000 and reports above $10,000, including covered transfers aggregated over 24 hours.
- FinCEN cites concerns about lawful privacy and reporting burdens, while retaining its ability to monitor mixers and address illicit finance.
The US Treasury’s Financial Crimes Enforcement Network has announced the withdrawal of two long-pending proposals that would have expanded reporting on cryptocurrency transactions involving self-hosted wallets and international mixing activity.
FinCEN announced the decision on October 5, citing public comments, the Trump administration’s deregulatory agenda and efforts to make digital-asset regulation appropriate for its intended purpose. The agency is also withdrawing its finding that international crypto mixing constitutes a class of transactions of primary money-laundering concern.
Coin Center, which opposed both proposals, welcomed the move as a “significant victory for financial privacy.” In an October 5 statement, policy director Jason Somensatto argued that the rules would have subjected lawful crypto users to excessive surveillance.
The withdrawal notices were filed for public inspection on October 5 and are scheduled for Federal Register publication on October 6. Both specify that the withdrawals take effect upon that publication. The decision closes two pending rulemaking processes; it does not repeal an adopted reporting regime.
The Wallet Proposal Targeted Transfers Above $3,000
The first proposal dates to the final weeks of the first Trump administration. Treasury announced it on December 18, 2020, and FinCEN published the proposed rule in the Federal Register on December 23.
An unhosted wallet, in the proposal’s terminology, allowed transactions without a financial institution operating the wallet. The category included wallets directly controlled by users, rather than accounts held with a bank or crypto exchange.
Under the 2020 proposal, banks and money services businesses would have had to retain records for covered transactions greater than $3,000. Those records would have included a counterparty’s name and physical address, alongside transaction details and information about the institution’s customer.
Covered transactions greater than $10,000 would have triggered reports to FinCEN. The reporting requirement would also have applied when multiple covered transactions aggregated to more than $10,000 within 24 hours, according to the withdrawal notice.
The proposal required verification of the institution’s own customer’s identity. Collecting counterparty information was a separate requirement; it should not be described as a universal obligation to verify every wallet owner.
The scope also extended to certain wallets hosted by financial institutions outside the Bank Secrecy Act framework in foreign jurisdictions identified by FinCEN. It was therefore broader than a measure addressing only personal wallets.
Coin Center objected that institutions would collect sensitive information about people who were not their customers, creating a different reporting standard for crypto transactions. FinCEN now says it will take no further action on this proposed rule.
The Mixer Rule Used a Broad Definition
The second proposal was announced on October 19, 2023, under the Biden administration and published on October 23. FinCEN invoked Section 311 of the USA PATRIOT Act to identify international convertible virtual currency mixing as a class of transactions of primary money-laundering concern.
FinCEN’s original announcement presented the measure as a response to money laundering, ransomware, terrorist financing and North Korean activity. It proposed additional recordkeeping and reporting by covered financial institutions.
A report would have been required when an institution knew, suspected or had reason to suspect that a transaction involved mixing within, or involving, a jurisdiction outside the United States. The proposed filing deadline was 30 calendar days after detection.
The proposed definition addressed activity that obscured a transaction’s source, destination or amount. Its examples included pooling funds, splitting transfers, using single-use wallets, exchanging assets and introducing delays. It was not limited to services marketed as crypto mixers.
The text included an exception for certain internal processes used by banks, broker-dealers and money services businesses that preserved transaction-source and destination records. Even with that exception, its breadth became a central point of criticism.
Reports would have combined blockchain information, such as wallet addresses and transaction hashes, with customer details, including names, dates of birth and identifying numbers. Coin Center argued that uncertainty about a transaction’s location could encourage institutions to report domestic activity as well. That was the organization’s assessment of the proposal’s likely effects.
FinCEN Cites Lawful Privacy and Reporting Burdens
The official documents provide an explanation for the reversal. The mixer withdrawal says commenters raised concerns that the expansive definition could discourage legitimate activity and impose a large reporting burden on covered institutions.
It also points to the July 2025 report from the President’s Working Group on Digital Asset Markets. That report recognized that lawful users may use mixers to protect financial privacy, alongside the risks from criminals using them to conceal illicit funds.
The wallet notice ties its withdrawal to the same administration’s effort to align digital-asset regulation with its policy objectives. FinCEN’s October 5 press release places both decisions within the broader deregulatory agenda.
Existing Oversight Continues
The scope of the decision remains specific. FinCEN’s existing crypto guidance addresses Bank Secrecy Act obligations for covered business models. Withdrawing these two proposals does not erase those underlying duties.
Nor does the decision settle every custody question. The SEC’s separate custody proposal, covered earlier by CoinScreamer, concerns investment advisers and regulated funds. Its use of adviser self-custody describes holding client assets, a different arrangement from an individual controlling a personal wallet.
FinCEN says it will continue monitoring mixers for money laundering, terrorist financing and other illicit activity, and may take further action. The immediate change is the abandonment of these proposed reporting obligations and the associated international-mixing finding, with formal withdrawal scheduled for October 6.
Disclaimer: CoinScreamer is an independent media brand owned and operated by NuvexMedia LLC, publishing news, research, and market insights on digital assets and related technologies. NuvexMedia LLC invests in and collaborates with companies across the digital asset, blockchain, and technology sectors. These relationships do not influence CoinScreamer’s editorial coverage, and the publication maintains full editorial independence to provide accurate, timely, and objective information. © 2025 NuvexMedia LLC. All rights reserved. This content is for informational purposes only and should not be considered legal, tax, investment, financial, or other professional advice.
