The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department, is withdrawing two proposed cryptocurrency rules that had remained unfinished for years. The withdrawals were filed for public inspection on October 5 and scheduled for Federal Register publication on October 6.
The first proposal, from December 2020, would have imposed new recordkeeping and reporting obligations on banks and money services businesses handling transactions with self-hosted wallets, also called "unhosted" wallets where users control their own private keys. Transactions exceeding $3,000 involving such wallets would have required recordkeeping and customer identity verification. Transactions above $10,000 would have triggered mandatory reporting to FinCEN, including counterparty information.
The second proposal, from October 2023, targeted cryptocurrency mixing as a class of transactions of primary money-laundering concern under the USA PATRIOT Act. The definition was broad, potentially covering pooling funds, splitting transactions, using single-use wallets, swapping cryptocurrencies, and introducing transaction delays. Financial institutions would have faced enhanced recordkeeping and reporting obligations including customer names, birth dates, addresses, and emails.
Both proposals drew criticism from privacy advocates who argued they could sweep ordinary privacy techniques into regulatory enforcement and create substantial compliance burdens on legitimate users and services.
FinCEN's withdrawal reflects a broader shift in Washington's approach to digital-asset privacy. A July 2025 President's Working Group on Digital Asset Markets report acknowledged that lawful users should be able to transact privately on public blockchains and recognized that mixers can serve legitimate privacy purposes.
FinCEN stated it will continue monitoring mixing activity for money laundering, terrorist financing, and other illicit finance risks. The agency can propose new rules in the future, but withdrawing these proceedings means it would have to initiate a new rulemaking process rather than revise the existing proposals.
The withdrawals do not repeal any existing prohibitions on self-custody or privacy tools, as these proposals never became final rules. Existing anti-money-laundering requirements, suspicious activity reporting rules, customer identification requirements, and sanctions administered by the Office of Foreign Assets Control remain in effect.
