The Financial Crimes Enforcement Network (FinCEN) has withdrawn two proposed regulations on cryptocurrency transactions, signaling a shift toward a more measured approach to U.S. crypto regulation as authorities reassess rules based on industry feedback.
The withdrawn proposals focused on non-hosted wallet transactions and crypto-mixing practices. The wallet proposal would have required financial institutions to report all transactions involving a customer's unhosted wallet of $10,000 or greater, and maintain records for transactions of $3,000 or more.
Since these proposals never reached final rule status, their withdrawal does not reduce current compliance obligations for institutions. Instead, the action prevents new regulatory requirements from taking effect, reducing uncertainty around self-custody regulations. Existing Anti-Money Laundering and sanctions requirements remain in place.
CFTC Establishes Broader Regulatory Framework
Complementing FinCEN's action, the Commodity Futures Trading Commission (CFTC) is advancing a broader national framework for crypto markets. The agency has opened a public-comment period for retail crypto transactions under Section 2(C)(2)(D), seeking input on defining a new market category for cryptocurrencies and digital assets.
The proposed framework would establish minimum compliance requirements including customer-asset segregation, capital safeguards, anti-money-laundering controls, and proof of reserves. The CFTC also intends to accept external wallet deliveries within 28 days as evidence of actual delivery. Public comments are due within 60 days.
Potential Market Restructuring
The framework may reshape access to leveraged crypto trading by creating a dedicated federal registration pathway for platforms offering margin, leverage, or financing. Registered futures commission merchants could become primary intermediaries for covered retail transactions, shifting compliance responsibility toward platforms handling customer assets and trading.
Spot markets would remain outside the proposed category, preserving a separate regulatory path. The framework could establish clearer separation between standard crypto trading and higher-risk leveraged activity, providing regulators greater oversight of complex customer exposure.
