FinCEN Withdraws Crypto Wallet and Mixer Proposals
Treasury withdrew two proposed crypto rules that would have required financial firms to collect records on some wallet and mixer activity, ending those plans.
The Chain Times Desk2 min read
The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) withdrew proposals on crypto wallets and mixers on Oct. 5, ending plans for new reporting and recordkeeping duties on financial firms. FinCEN’s announcement says the withdrawals are part of the administration’s effort to make digital asset rules fit for purpose.
What would the wallet proposal have required?
The 2020 proposal would have made banks and money services businesses keep records on some transactions with unhosted wallets, which are controlled directly by their users. Under the proposal, firms would have had to keep records for transactions above $3,000 and report transactions above $10,000, including information about the other party. The thresholds and requirements are described in the Federal Register withdrawal notice.
Those duties would have fallen on financial firms, not directly on wallet owners. FinCEN said it will take no further action on the proposal.
What would the mixer proposal have covered?
The 2023 proposal would have required financial firms to report certain transactions involving crypto mixing, which combines or routes funds to obscure their source, destination or amount. FinCEN’s withdrawal notice says reports could have included the amount and type of crypto, wallet addresses, transaction records, dates and IP addresses.
The proposal also would have treated international crypto mixing as a class of transactions of primary money laundering concern under the USA PATRIOT Act. FinCEN said commenters raised concerns that its broad definition of mixing could chill legitimate activity and create a large reporting burden for covered financial firms.
Will FinCEN stop monitoring crypto mixers?
No. FinCEN said illicit actors continue to use mixers to hinder law enforcement investigations, and that it will keep monitoring them for signs of money laundering, terrorist financing or other illicit activity. The agency said it may take steps in the future.
The withdrawals end these two proposed rules, but FinCEN’s notice does not say it is ending its scrutiny of crypto mixing. The wallet proposal will receive no further action, while the agency left open the possibility of future action on mixers.
Sources and documents
- FinCEN’s announcement — fincen.gov
- Federal Register withdrawal notice — federalregister.gov
- withdrawal notice — federalregister.gov