FinCEN Withdraws Unhosted Wallet and Mixer Reporting Proposals

The Financial Crimes Enforcement Network said on Oct. 5 it is withdrawing two proposed crypto rules covering convertible virtual currencies, ending a fight that began in the final weeks of President Trump's first term. The announcement pulls a December 2020 proposal on transactions with self-custodied wallets and a 2023 proposal that would have treated crypto mixing as a top-tier money-laundering risk.

The first proposal would have imposed recordkeeping, verification and reporting duties on banks and money services businesses for certain transfers involving convertible virtual currencies and unhosted wallets, according to the notice. Unhosted wallets, also called self-custodial wallets, are controlled directly by users rather than by an exchange or bank.

Decrypt reported that the 2020 plan would have required banks and money services businesses to keep records on customer transfers with such wallets above $3,000 and to report transfers topping $10,000, including counterparty information. The idea, as Decrypt described it at the time, was to extend Bank Secrecy Act duties to personal wallets.

Unchained reported that the wallet proposal also covered cases where several transfers added up to more than $10,000 within 24 hours. "FinCEN will take no further action on this NPRM," the withdrawal notice says, using the shorthand for a notice of proposed rulemaking.

The second withdrawal kills a Biden-era proposal that would have designated international crypto mixing as a class of transactions of "primary money laundering concern" under Section 311 of the USA PATRIOT Act. Mixing services pool and shuffle coins to hide their trail, and the 2023 plan would have forced financial institutions to report wallet addresses, transaction hashes and IP addresses tied to suspected mixing, Decrypt wrote.

Both notices were filed Monday and are set for publication in the Federal Register on Tuesday, according to that coverage. Unchained added that both were signed by FinCEN Deputy Director Jimmy L. Kirby, and linked the full texts through the Federal Register's public-inspection site.

FinCEN said it weighed the comments submitted on each proposal and is dropping them as part of the administration's deregulatory agenda and an effort to keep digital-asset rules fit for purpose, the announcement says. On mixing, the agency accepted commenters' warnings that the rule defined the activity so broadly it could chill legitimate use while placing a heavy reporting load on covered institutions.

Even so, the agency said criminals still use mixers to slow investigators, and it will keep watching the activity and may act again later. That reservation appears in the mixer notice, which Unchained cited in its account.

Both withdrawals point to the July 2025 report from the President's Working Group on Digital Asset Markets. The mixer notice quotes its line that the administration "supports the ability of lawful users of digital assets to privately transact on a public blockchain," according to the two reports.

Coin Center, the Washington policy group that opposed both proposals for years, welcomed the move. "It's been a hard month for privacy and your right to use crypto. There's a bright spot," Executive Director Peter Van Valkenburgh wrote on X, as quoted in that coverage. He cautioned that the underlying legal authority to write similar rules remains in place.

Jason Somensatto, writing for Coin Center, called the withdrawal "a significant victory for financial privacy," Unchained noted. He argued the proposals stayed dangerous as long as Treasury had not formally dropped them: "Their official withdrawal finally closes that door." The group also fought Treasury's sanctions on the mixer Tornado Cash, a case that ended in July 2025 when the department dropped its appeal.

The wallet rule had already been listed as withdrawn on Treasury's regulatory agenda as of April 12, 2024, as reported that year. Monday's filing is the formal notice that closes the docket.

Self-custody remains contested ground elsewhere. Early last year the Consumer Financial Protection Bureau floated an interpretive rule that would have brought wallets such as MetaMask under consumer payment law, drawing pushback from industry stakeholders, according to that account. That proposal is separate from the two FinCEN withdrawals and stays alive.