FinCEN withdraws proposed cryptocurrency mixing rules due to concerns about impacting "legitimate activities"
A U.S. Treasury agency stated that it has withdrawn two proposed rules regarding non-custodial wallets and crypto mixers "as part of the Trump administration's deregulatory agenda."
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has withdrawn two proposed rules affecting its enforcement approach toward crypto companies, including one on “convertible virtual currency mixing.”
According to a notice released on Monday, the agency will withdraw a proposal originally put forth in December 2020 that would have imposed “recordkeeping, verification, and reporting requirements” on cryptocurrency transactions and unhosted wallets. FinCEN will also withdraw another rule affecting the enforcement of cryptocurrency mixing services. FinCEN stated that the mixing rule, initially proposed in October 2023, “could have a chilling effect on legitimate activities and impose a significant reporting burden on covered financial institutions.”
Monday’s notice stated: “FinCEN has considered comments submitted on these proposals and has decided to withdraw them as part of the Trump administration’s deregulatory agenda and ongoing efforts to ensure that digital asset regulation is practically aligned with real-world use cases.”
This regulatory move is the latest in a series of recent actions by U.S. agencies responsible for overseeing crypto assets, all of which cite the Trump administration’s crypto policy agenda. Earlier today, CFTC Chairman Michael Selig announced that the agency is using its “existing statutory authority” to propose two rules clarifying how crypto companies can operate within its regulatory scope without requiring additional congressional authorization.
Many crypto and blockchain industry advocacy groups welcomed FinCEN’s policy reversal on reporting requirements for crypto mixers and unhosted wallets. The Crypto Council for Innovation posted on X on Monday that the move is “positive for the digital assets ecosystem.”
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