The U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) announced on October 5, 2026, that it would withdraw two proposals addressing self-custody crypto wallets and cryptocurrency mixing services, marking a significant shift in federal regulatory approach to digital assets.
The first proposal, introduced in December 2020, would have required banks and money services businesses to maintain records and report certain transactions involving unhosted wallets above $3,000 and $10,000 thresholds respectively. The framework also called for financial institutions to collect and verify information about customers and counterparties in transactions with private wallets.
A second proposal, introduced in 2023 under Section 311 of the USA PATRIOT Act, targeted convertible virtual currency (CVC) mixing services. It sought to classify transactions involving CVC mixers as a primary money laundering concern and require financial institutions to report information linked to such transactions.
The withdrawal removes regulatory requirements that would have placed additional burdens on banks and exchanges when customers transferred cryptocurrency to self-hosted wallets. Under the withdrawn framework, there is no new federal requirement forcing these institutions to identify wallet owners solely based on customer transfers to private addresses.
Industry groups, including the Digital Chamber, have welcomed the decision, which they say removes regulatory pressure surrounding self-custodial wallets. The Treasury characterized the withdrawal as part of the administration's effort to develop digital asset regulations that are "fit-for-purpose." Existing anti-money laundering and financial regulations remain in effect.
