Cryptoupdated 2h ago2 min read
FinCEN Withdraws Crypto Mixer And Unhosted Wallet Surveillance Rules, Deputy Director Jimmy L. Kirby Signed
FinCEN withdrew two proposed rules governing unhosted wallets and crypto mixers. Notices were filed Oct. 5 and will be published in the Federal Register Oct. 6.
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FinCEN withdraws two proposals
The Financial Crimes Enforcement Network withdrew two proposed crypto surveillance rules on October 5, including a 2023 proposal targeting international crypto mixing and a December 2020 proposal aimed at unhosted or self-custody wallets.
Deputy Director Jimmy L. Kirby signed both withdrawal notices, and the notices were scheduled for publication in the Federal Register on October 6.
FinCEN’s withdrawn mixing proposal had invoked Section 311 of the USA PATRIOT Act to designate international convertible virtual currency mixing as “a class of transactions of primary money laundering concern,” which would have required covered institutions to report transactions they knew or suspected involved mixing.
FinCEN’s withdrawn self-custody proposal would have required banks and money services businesses to verify customers and keep records for transactions involving unhosted wallets, with transactions above $10,000 triggering reporting to FinCEN.
The withdrawal left existing compliance duties unchanged because neither rule was ever finalized, and FinCEN said it would still monitor mixing activity for illicit finance and may take steps in the future.
Privacy advocates celebrate
Coin Center welcomed the withdrawals, and the group described the move as a “major victory for financial privacy.” Coin Center’s Jason Somensatto said the end of the self-custody wallet rule was a chapter that was “officially closed.” FinCEN said commenters’ concerns were valid, and the agency acknowledged that the expansive definition of mixing could have chilled legitimate activity and imposed a large reporting burden on covered financial institutions.
FinCEN also said it would take no further action on the wallet NPRM, while the mixer notice said the withdrawal was informed by concerns that the “expansive definition of CVC mixing” could chill legitimate activity and place a large reporting burden on covered financial institutions. The President’s Working Group on Digital Asset Markets’ July 2025 report was cited in both notices, and FinCEN said the report emphasized protecting lawful users’ right to transact privately with digital assets on public blockchains.
What changes, what stays
FinCEN’s withdrawal did not remove existing Bank Secrecy Act obligations for regulated crypto businesses, and Coinbase still had to continue know-your-customer identity checks, maintain an anti-money-laundering program, file suspicious activity reports, and conduct screenings for Office of Foreign Assets Control (OFAC) sanctions. 24/7 Wall St. said the rescission meant exchanges avoid potential future reporting costs rather than eliminating existing obligations, and it said customers buying Bitcoin through regulated exchanges would still be subject to the same identity checks after October 5. FinCEN said it still believes illicit actors use mixers to hinder law enforcement investigations, and the agency said it “may take appropriate steps in the future to mitigate any such activity.”
The Block reported that FinCEN’s mixing notice withdrew the October 2023 finding that international convertible virtual currency mixing is “a class of transactions of primary money laundering concern,” along with the proposed rule attached to it. The practical effect described across the coverage was narrower than a full retreat from enforcement, because the withdrawals ended two specific rulemakings while FinCEN retained Section 311 authority to take action against specific foreign mixers in the future.