The Treasury Department's Financial Crimes Enforcement Network, or FinCEN, has withdrawn two surveillance proposals that faced years of industry opposition. Notices of withdrawal were filed Monday and are set for publication in the Federal Register on Tuesday.
The first withdrawal targets FinCEN's December 2020 "unhosted wallet" proposal. The rule would have required banks and money services businesses to maintain records on customer transactions with self-custodial wallets above $3,000 and report transactions exceeding $10,000, including counterparty information. Unhosted wallets, also called self-custodial wallets, are controlled directly by users rather than through exchanges or banks.
The second withdrawal scraps a 2023 proposal that would have designated international crypto mixing as a class of transactions of "primary money laundering concern" under the USA PATRIOT Act. Mixing services pool and shuffle coins to obscure transaction trails. The proposal would have required financial institutions to report wallet addresses, transaction hashes, and IP addresses tied to suspected mixing activity.
FinCEN cited concerns that the mixing proposal's expansive definition could chill legitimate activity. The agency noted it will continue monitoring mixers for illicit finance and may pursue alternative approaches in the future.
Both withdrawals reference the White House's July 2025 digital asset report, which stated that the administration "supports the ability of lawful users of digital assets to privately transact on a public blockchain."
Coin Center, a Washington-based crypto policy organization that opposed both proposals throughout their development, welcomed the withdrawals. However, the group cautioned that the underlying statutory authority for similar rules remains in place.
