FinCEN Withdraws 2023 Crypto Mixing Rule Over Concerns…
By Abdelaziz Fathi
AI summary of the source article
The U.S. Financial Crimes Enforcement Network (FinCEN) is withdrawing two rule proposals that would have expanded reporting obligations for cryptocurrency mixers and unhosted wallets. The 2023 proposal sought to designate international convertible virtual currency mixing as a class of primary money laundering concern under Section 311 of the USA PATRIOT Act, while a 2020 proposal proposed recordkeeping and reporting thresholds for transactions involving self-hosted wallets. FinCEN determined that the mixing rule's broad scope risked chilling ordinary blockchain activity and imposing substantial compliance burdens. The withdrawal leaves existing Bank Secrecy Act requirements in place while signaling a focus on specific illicit conduct.
Why it matters
The decision eliminates two potential compliance and reporting frameworks for banks, crypto exchanges, and wallet providers dealing with self-custody and privacy-preserving blockchain transactions.
Key facts
- FinCEN dropped a 2023 proposal targeting international crypto mixing under Section 311 of the USA PATRIOT Act.
- A December 2020 proposal that would have mandated reporting for unhosted wallet transactions over $10,000 was also withdrawn.
- The withdrawals do not alter existing Bank Secrecy Act obligations, AML programs, or suspicious-activity reporting for money services businesses.