FinCEN has withdrawn two proposed cryptocurrency rules that targeted crypto mixers and unhosted wallets.
The agency cited industry concerns and its broader push for regulations that better fit digital assets.
The move ends proposals that could have imposed extensive reporting and identity checks on financial firms. Existing anti-money laundering and customer verification requirements remain unchanged.
FinCEN drops proposed crypto mixer reporting requirements
The Financial Crimes Enforcement Network withdrew its 2023 proposal covering transactions involving cryptocurrency mixers.
FinCEN said it reviewed public comments before making the decision. It also linked the withdrawal to the Trump administration’s broader deregulatory agenda.
The agency said the government wants digital asset rules that remain “fit-for-purpose” without unnecessarily restricting legitimate activity.
The 2023 proposal sought to classify international crypto mixing as a primary money laundering concern under the USA PATRIOT Act.
FinCEN argued at the time that mixers could help criminals hide transaction trails. Officials also linked their use to hackers, hostile governments, and terrorist organizations.
Former FinCEN Director Andrea Gacki said mixers could help bad actors conceal illicit funds and finance further operations.
Under the proposal, financial institutions would have recorded detailed information about transactions involving mixing services. Required data could have included wallet addresses, transaction hashes, and IP addresses.
The proposal also used a broad definition of mixing. It covered methods that concealed the source, recipient, amount, or movement of cryptocurrency.
That definition generated criticism from privacy groups and the wider crypto industry.
Coin Center argued that the proposal could capture ordinary privacy practices used by legitimate cryptocurrency holders.
The advocacy group also warned that risk-averse financial institutions could report lawful domestic transactions. Such reporting could lead to account restrictions or closures.
FinCEN said public concerns contributed to its decision. However, the agency will continue monitoring convertible virtual currency mixers for suspected illicit activity.
Unhosted wallet proposal also withdrawn
FinCEN also withdrew a separate rule first proposed in December 2020.
That proposal targeted transactions involving unhosted wallets and certain foreign cryptocurrency platforms.
Financial institutions would have needed to verify customer identities for transactions above $3,000 involving qualifying wallets or platforms.
The proposal also required reports for transactions exceeding $10,000. Multiple related transactions crossing that threshold within 24 hours could also have triggered reporting.
Coin Center argued that the proposal treated cryptocurrency transactions differently from comparable financial activity.
Executive Director Peter Van Valkenburgh said the withdrawal effectively killed the proposed “unhosted wallet rule.”
He said companies such as Coinbase would no longer face the proposed requirement to gather information about people holding their own cryptocurrency.
The Crypto Council for Innovation also welcomed FinCEN’s decision. The group described the withdrawals as positive for the digital asset sector.
Both withdrawals referenced the White House’s July 2025 digital asset report. The report supported lawful users’ ability to transact privately on public blockchains.
The decision removes potential compliance obligations that exchanges and financial institutions had monitored for several years.
However, firms must still comply with existing anti-money laundering and know-your-customer rules.
FinCEN has also kept the option to introduce new rules or enforcement measures. The agency could act again if mixers, unhosted wallets, or other services create new financial crime risks.
