The US Financial Crimes Enforcement Network (FinCEN) has dropped two proposed crypto rules that would have added reporting duties for banks and money services businesses. On 5 October 2026, it announced that it is withdrawing its 2020 proposal on transactions with unhosted wallets and its 2023 proposal to treat international cryptocurrency mixing as a primary money laundering concern. Both withdrawals were published in the Federal Register on 6 October and took effect that day.
"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," said the Financial Crimes Enforcement Network in its announcement.
Neither proposal was ever finalised, so no current obligation is removed. What changes is the outlook: two sets of crypto reporting requirements that compliance teams had been tracking for years are now off the table.
The unhosted wallet proposal
The first proposal dated from 23 December 2020. It covered convertible virtual currency (CVC) and digital assets with legal tender status moving between a bank or money services business and an unhosted wallet, meaning a wallet that no financial institution is required to operate on the user's behalf. It also covered wallets held at foreign institutions outside the Bank Secrecy Act in jurisdictions that FinCEN would identify.
Under the proposal, banks and money services businesses would have had to:
- report to FinCEN, and check who their customer was, for any transfer to or from such a wallet worth more than $10,000, with smaller transfers in the same 24 hours added together;
- keep records of the transfer and the other party, and check their own customer's identity, once a transfer passed $3,000.
The withdrawal notice, signed by FinCEN Deputy Director Jimmy L. Kirby, gives a short reason. It points to the July 2025 report of the President's Working Group on Digital Asset Markets, set up under Executive Order 14178, and says the withdrawal is part of the administration's efforts to make digital asset rules fit for purpose. FinCEN says it will take no further action on the proposal.
The crypto mixing proposal
The second proposal, published on 23 October 2023, used FinCEN's powers under section 311 of the USA PATRIOT Act. It found that international CVC mixing was a class of transactions of primary money laundering concern and proposed the first of the five special measures available under that section, which covers recordkeeping and reporting.
The definition of mixing was broad. It reached any activity that hides the source, destination or amount of a crypto transaction, whatever the protocol or service used. It listed techniques such as combining many users' coins, breaking a payment into smaller hops, routing funds through throwaway addresses, converting between tokens and building in deliberate delays. Anyone or anything that enabled mixing, including software code, counted as a mixer.
Covered financial institutions would have had to report transactions they knew, suspected or had reason to suspect involved mixing outside the United States. The filings would have captured details such as how much was sent and in which token, which mixing service was involved, the customer's wallet addresses and IP addresses, transaction hashes and a written description of the activity. Firms would also have had to hold identifying records on the customer, from date of birth to home and email addresses.
The withdrawal notice removes both the finding and the proposed rule. FinCEN says it still sees mixers being misused, but accepts the concerns raised in public comments.
"While FinCEN maintains that illicit actors continue to use mixers and other tools and methods to hinder law enforcement investigations, this withdrawal is informed by the concerns from commentors that the expansive definition of CVC mixing in the proposed rule could have a chilling effect on legitimate activity and place a large reporting burden on covered financial institutions," said the Financial Crimes Enforcement Network in its withdrawal notice.
The agency adds that it will keep monitoring activity involving mixers for signs of money laundering, terrorist financing or other illicit finance, and may take steps in the future.
What the White House report said
Both notices rest on the Working Group's report, Strengthening American Leadership in Digital Financial Technology. The report noted that FinCEN received over 2,200 comments on the mixing proposal, and that illicit actors, including North Korean hackers and ransomware groups, use mixers to launder funds. It also made the case for privacy.
"Nevertheless, lawful users of digital assets may leverage mixers to enable financial privacy when transacting through public blockchains," said the President's Working Group on Digital Asset Markets in its July 2025 report.
The report recommended that Treasury consider next steps on the mixing rule. The withdrawal is that next step.
Part of a wider rollback
The move follows other changes to FinCEN's rulebook this year, including the final rule that permanently removed domestic beneficial ownership reporting in August. Internationally, FATF has been consulting on guidance for its revised Travel Rule, which governs the information that must travel with crypto and other payments.
What compliance teams should note
The Bank Secrecy Act rules that already apply to crypto are unchanged. Banks and money services businesses still have to file suspicious activity reports, run customer due diligence and meet existing recordkeeping and travel rule requirements for transfers. FinCEN's notice is explicit that it is still watching mixers.
For firms that had built or planned systems for the two proposals, the practical points are:
- there will be no new US federal report for transactions with unhosted wallets over $10,000, and no new recordkeeping duty above $3,000;
- there will be no section 311 special measure covering international mixing, and no dedicated mixing report;
- exposure to mixers remains a risk factor in transaction monitoring and suspicious activity reporting, and FinCEN has kept the option of acting again;
- firms operating in other countries still need to meet local rules on self-hosted wallets and the Travel Rule, which vary from country to country.
Both proposals were withdrawn with immediate effect on publication. Neither notice opens a new comment period.
