The U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) has withdrawn two proposed surveillance rules that would have expanded reporting requirements for unhosted cryptocurrency wallets and crypto mixers. The agency stated that this action is part of the Trump administration’s efforts to ensure digital asset regulations are fit-for-purpose.
In separate notices, FinCEN announced the withdrawal of the proposed rule for unhosted wallets, which had been proposed in 2020. This rule would have mandated banks and other financial institutions to report certain transactions exceeding $3,000 and $10,000 involving crypto assets held in customer-held unhosted wallets. Additionally, FinCEN withdrew a proposed rule targeting crypto mixers, which would have required financial institutions to report transactions involving foreign crypto mixers.
FinCEN indicated that concerns raised by commentators, particularly regarding the expansive definition of crypto mixing potentially chilling legitimate activity and imposing a significant reporting burden, informed this decision. Despite the withdrawal, the agency affirmed its commitment to monitoring activities involving crypto mixers for any signs of money laundering or other illicit financial activities.
Coin Center, an organization that had opposed the proposed rules, hailed the withdrawal as a significant victory for financial privacy, particularly as discussions around privacy in the crypto space gain momentum.