FinCEN Withdraws Proposed Rules on Crypto Mixers, Wallets

The Financial Crimes Enforcement Network withdrew two proposed rules covering cryptocurrency transactions involving unhosted wallets and convertible virtual currency mixing, according to a notice issued Monday.

One proposal, issued in December 2020, would have required recordkeeping, identity verification and reporting for certain cryptocurrency transactions involving unhosted wallets. These wallets are controlled directly by users rather than by exchanges or other service providers.

The second proposal, released in October 2023, addressed crypto mixing services. Mixers combine funds from multiple users and redistribute them, making transaction histories harder to trace. The proposed rule would have classified transactions involving mixers as reportable activity for covered financial institutions.

FinCEN wrote that the mixer requirements could have created a large reporting burden for financial institutions and discouraged lawful activity. The agency reviewed public comments before withdrawing both proposals.

“FinCEN has considered the comments submitted in response to these proposals and is withdrawing them as part of the Trump Administration’s deregulatory agenda and ongoing efforts to ensure digital asset regulations are fit-for-purpose,” the notice stated.

The withdrawals came as other US agencies continued work on digital-asset rules. The Commodity Futures Trading Commission announced Monday that it plans to propose two rules for crypto companies under the agency’s existing statutory authority, without additional legislation from Congress.

The Crypto Council for Innovation welcomed FinCEN’s decision, describing it in a Monday post on X as “positive for the digital asset ecosystem.”