FinCEN Announces Withdrawals of Proposed Digital Asset Related Rules
US Treasury unit, Financial Crimes Enforcement Network (FinCEN) has dropped a proposed rule that would have forced banks and crypto firms to report many crypto mixing transactions, and the rule never took effect.
In an official statement, FinCEN indicated that the withdrawn 2023 proposal would have labeled international crypto mixing as a primary money laundering concern and required detailed reports on suspect mixing transactions with a foreign link.
Its removal eases looming compliance and privacy risks around mixers and self-custody, but existing anti money laundering and sanctions rules for exchanges and transmitters still fully apply.
FinCEN signaled it will keep monitoring mixers and could return with narrower rules, while DOJ and sanctions cases against specific mixer projects continue.
The unit said it considered the comments submitted in response to these proposals and is withdrawing them as part of the Trump Administration’s deregulatory agenda and ongoing efforts to ensure digital asset regulations are fit-for-purpose.
The unit withdrew its 2023 proposal that treated “convertible virtual currency mixing” with a foreign nexus as a class of transactions of primary money laundering concern and attached a special reporting measure to it.
According to document reviewed, covered institutions would have had to report amounts, wallet addresses, transaction hashes, IP addresses and customer identity data whenever they knew or suspected mixing with a foreign link, using a very broad definition that included pooling funds, splitting transfers, single use wallets and asset swaps regardless of protocol or service used.1
At the same time, FinCEN also formally dropped an older 2020 proposal that would have required reports on large transfers to self-hosted wallets, but that is secondary to this mixing headline.2
A far-reaching surveillance framework aimed at mixing activity is off the table in its current form and will not quietly “snap into” force later.
Because the mixing rule was only ever a proposal, nothing new is being rolled back; instead, a future compliance burden and privacy overhang have been removed. FinCEN explicitly cited concerns that its broad definition could chill legitimate activity and impose a large reporting burden on financial institutions.13
Crypto advocates like the Crypto Council for Innovation and Coin Center welcomed the withdrawals as a “significant victory for financial privacy,” arguing the rule would have captured routine privacy techniques used by ordinary users.34
However, crypto money transmitters still must register, run risk based AML programs, perform customer checks, keep records and file suspicious activity reports under existing Bank Secrecy Act rules.1 Using or operating a mixer can still trigger other legal issues depending on how it is structured and used.
This means Exchanges and custodial services avoid a new dedicated mixing reporting layer, but they cannot relax current AML/KYC practices, and mixer operators still face serious legal risk if they facilitate crime.
FinCEN’s withdrawal removes one of the most expansive proposed surveillance regimes around crypto mixing before it ever became law, easing immediate compliance and privacy worries for exchanges and users.
The move fits a broader shift toward more targeted, “fit for purpose” digital asset rules, but it does not relax existing AML, sanctions or criminal enforcement, and it leaves the door open for narrower future rules that focus on genuinely high risk mixing activity.
