The Financial Crimes Enforcement Network (FinCEN), a bureau under the U.S. Treasury Department, has rescinded two longstanding cryptocurrency regulatory proposals. These withdrawn proposals previously targeted high-value transactions to self-hosted wallets and introduced additional reporting obligations for crypto mixers. Neither proposal had been enacted.
Proposal for Self-Hosted Wallet Transfers Shelved
The first regulation proposal withdrawn by FinCEN, drafted in December 2020, mandated banks and money service businesses, such as cryptocurrency exchanges, to report crypto transactions exceeding $10,000 involving wallets controlled by customers. The rule aimed to cover transactions reaching this threshold within a 24-hour window.
The regulation would have also required companies to gather additional information about both the initiating customer and the counterparty’s wallet. These wallets are defined by ownership of private keys directly by the user, offering control over assets outside the purview of banks or exchanges.
FinCEN stated that retracting these proposals aligns with the Trump administration’s focus on reducing regulations and crafting purpose-fit rules for digital assets.
This proposal attracted thousands of public comments over nearly six years but never reached a conclusion. The recent decision effectively closes a chapter of prolonged uncertainty.
Plans for Cryptocurrency Mixer Regulations Also Dropped
In addition to the wallet proposal, FinCEN retracted a 2023 proposal that sought to classify cryptocurrency mixers as a primary money-laundering concern. Adoption of this proposal would have imposed additional reporting obligations on financial institutions processing these transactions.
FinCEN operates under the U.S. Treasury Department, known for collecting data to combat financial crimes. The latest move suggests a preference for more focused regulatory measures tailored for digital assets.
Glossary: A crypto mixer is a service that obfuscates digital asset transaction paths by blending multiple users’ transactions. A self-hosted wallet is a type where the user maintains direct control through their private key.
Shift in Regulatory Approach Emerges
FinCEN attributed the withdrawal of these proposals to the Trump administration’s deregulatory agenda. The announcement highlighted the goal of establishing a regulatory framework specifically designed for the digital asset market.
Neither of the proposals was ever implemented, nor did they impose binding obligations on financial institutions.
The decision arrives amid ongoing discussions about federal approaches to self-custody solutions and privacy-centric transaction tools. FinCEN’s move suggests that previously considered extensive reporting requirements will not proceed for the time being.
