The U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) announced on October 5 that it is withdrawing a proposed reporting rule for crypto mixing—techniques used to obscure a transaction's source, destination, or amount.
The withdrawal addresses both FinCEN's 2023 finding that international crypto mixing constitutes a class of transactions of primary money laundering concern and the proposed recordkeeping and reporting rule itself. The withdrawal takes effect upon publication in the Federal Register, scheduled for October 6.
Why the Proposal Was Dropped
FinCEN cited commenters' concerns that the expansive definition of mixing activities could discourage legitimate transactions and impose excessive reporting burdens on financial institutions.
The proposed rule would have applied broadly beyond dedicated mixing services, covering activities such as pooling funds, coordinating transactions with code, splitting transfers, routing funds through single-use wallets, exchanging between crypto assets, and introducing user-initiated delays. Covered institutions would have reported wallet addresses, transaction hashes, IP addresses, and customer identity information when foreign transactions met certain conditions.
Existing Obligations Unchanged
The withdrawal does not eliminate existing compliance requirements. Covered crypto money transmitters remain subject to registration, risk-based anti-money-laundering programs, customer verification procedures, recordkeeping, and suspicious activity reporting requirements. Qualifying transfers also remain subject to FinCEN's Funds Travel Rule.
FinCEN also withdrew a separate proposal from December 2020 regarding unhosted wallets, which had previously been listed as withdrawn in April 2024.
FinCEN stated that it will continue monitoring crypto mixing for money laundering, terrorist financing, and other illicit activity and may pursue additional measures in the future.
