The U.S. Treasury is withdrawing two proposed crypto rules from 2020 and 2023 that would have increased reporting and recordkeeping requirements for financial institutions handling self-custody wallets and crypto mixing transactions.
FinCEN, the Treasury agency responsible for enforcing the Bank Secrecy Act, filed both withdrawal notices on Oct. 5, with formal publication scheduled for Oct. 6.
The first proposal, introduced in December 2020, would have required banks and money services businesses to collect additional information about certain crypto transactions involving wallets held outside regulated financial institutions.
Under the proposed rules, financial institutions would have recorded transaction and counterparty information and verified a customer’s identity for covered transfers above $3,000. Transactions above $10,000 would also have required a report to FinCEN.
The $10,000 threshold would have applied to multiple transactions totaling more than that amount within a 24-hour period. The proposal covered deposits, withdrawals, exchanges, payments and other crypto transfers.
The rules also included certain wallets held at foreign financial institutions that were outside the Bank Secrecy Act system in jurisdictions identified by FinCEN.
FinCEN said it decided not to move forward with the wallet proposal as the Trump administration reviews whether digital asset regulations are practical and appropriate. The agency referenced a July 2025 report from the President’s Working Group on Digital Asset Markets.
The second withdrawal involves FinCEN’s 2023 proposal targeting foreign crypto mixing services.
In 2023, FinCEN designated international convertible virtual currency mixing as a class of transactions of primary money laundering concern under Section 311 of the USA PATRIOT Act. It also proposed additional reporting requirements for transactions involving foreign crypto mixers.
The proposed rules would have required covered financial institutions to report transactions when they knew, suspected, or had reason to believe that foreign mixing was involved.
FinCEN’s definition of mixing was broad. It included activities such as pooling funds, splitting transfers, using single-use wallets, exchanging digital assets and delaying transactions when those actions could make it harder to identify the source, destination or amount of a transaction.
The agency said some commenters were concerned that the proposal could affect legitimate crypto activity and create significant compliance costs.
FinCEN also acknowledged that lawful users may use crypto mixers for privacy because blockchain transactions are generally visible to the public.
At the same time, the agency maintained that criminals use mixing services to hide funds and make investigations more difficult. FinCEN said it would continue monitoring crypto activity for money laundering, terrorist financing and other illegal activity.
Coin Center welcomed the Treasury’s decision, calling the withdrawals a major victory for financial privacy.
The crypto advocacy group had strongly opposed both proposals. It argued that the wallet rule could force financial institutions to collect personal information about people who were not their customers.
Coin Center also challenged the 2023 mixing proposal over concerns about domestic transactions and its potential impact on legitimate users. The organization argued that institutions might report transactions taking place entirely within the United States simply because they could not clearly determine where a mixing transaction occurred.
The group also questioned whether the proposal went beyond the authority provided under Section 311 and raised concerns about due process.
The latest decision does not mean FinCEN is stepping away from crypto-related enforcement. The agency said it will continue monitoring digital assets and can take additional action when necessary.
FinCEN has recently continued using existing financial reporting systems to track crypto-related crime. In one recent analysis, the agency identified about $12.7 billion in suspicious activity linked to Southeast Asian crypto investment scams through 33,904 Bank Secrecy Act reports filed between September 2023 and December 2025.
Around 1,300 financial institutions submitted those reports. Money services businesses, mainly digital asset companies, accounted for 55% of the reports and identified about $5.5 billion in suspicious activity, while banks reported another $6.4 billion.
FinCEN noted that these figures do not directly represent victim losses because the reports may include attempted transfers, duplicate reports and filing errors.
The agency also said its Rapid Response Program has helped recover just over $1 billion for 5,790 U.S. victims since 2015.
For the crypto industry, the withdrawal of the two proposed rules removes two major surveillance and reporting proposals that had raised concerns about privacy, compliance costs and the treatment of legitimate crypto users.
