FinCEN Withdraws Proposed Crypto Mixer and Unhosted Wallet Reporting Rules
By Unchained
AI summary of the source article
The Financial Crimes Enforcement Network (FinCEN) has filed notices to withdraw two proposed crypto rules targeting crypto mixers and unhosted wallets. The first proposal, introduced in 2023 under Section 311 of the USA PATRIOT Act, would have required institutions to report foreign mixing transactions alongside wallet addresses, transaction hashes, and IP addresses. The second, proposed in December 2020, would have required banks and money services businesses to report unhosted wallet transactions exceeding $10,000 and retain records for amounts over $3,000. FinCEN cited commenter warnings regarding excessive reporting burdens and chilling effects on legitimate activity, alongside a July 2025 White House report supporting transaction privacy.
Why it matters
The decision eliminates potentially burdensome reporting and identity-collection mandates for banks, money services businesses, and crypto exchanges interacting with self-custodied wallets and mixing services.
Key facts
- FinCEN is withdrawing a 2023 proposal requiring reporting on foreign crypto mixing transactions, including IP addresses, transaction hashes, and wallet addresses.
- A December 2020 proposal requiring reports on unhosted wallet transactions exceeding $10,000 and recordkeeping above $3,000 is officially terminated.
- Both withdrawal notices reference a July 2025 report from the President's Working Group on Digital Asset Markets supporting privacy for lawful users.