FinCEN announced on Sunday that it is dropping two long-standing regulatory proposals, one aimed at large crypto transfers to self-custodied wallets and another targeting mixing services. The agency said the withdrawals are part of a broader deregulatory effort.

Background of the proposals

The first rule, drafted in December 2020, sought to expand the Bank Secrecy Act to cover cryptocurrency. It would have required banks, money-service businesses and crypto exchanges to file reports when a customer moved more than $10,000 worth of digital assets to or from a wallet they control directly, known as an unhosted wallet. The reporting threshold applied on a rolling-24-hour basis, and firms would have needed to collect identifying data on both the sender and the recipient wallet.

The second proposal, introduced in 2023, treated transactions that use crypto mixers as a primary money-laundering concern. Under that framework, financial institutions handling mixer activity would have faced additional reporting obligations.

Reasons for the withdrawal

Both rules never entered force and had been under public review for several years, gathering thousands of comments. FinCEN said the decision aligns with the current administration’s agenda to streamline digital-asset regulation and create rules that are “fit-for-purpose.” By removing the requirements, the agency signals a shift away from expanding reporting burdens on the crypto sector.

What the rules would have required

If implemented, the unhosted-wallet rule would have compelled institutions to:

  • Track every crypto movement exceeding $10,000 in a 24-hour window.
  • Record the identity of the customer initiating the transfer.
  • Gather details about the destination wallet, even when the holder managed the private keys.

The mixer proposal would have classified mixing services as high-risk, thereby obligating banks and crypto platforms to file additional suspicious-activity reports whenever such services were used.

Political context

The original unhosted-wallet regulation was drafted during the final weeks of the first Trump administration. Its revival and eventual cancellation under the same administration’s current leadership illustrate a consistent deregulatory stance toward crypto.

Industry reaction

Stakeholders had expressed concerns that the reporting mandates would increase compliance costs and potentially hamper legitimate use cases, such as peer-to-peer payments and decentralized finance activities. The withdrawal is likely to be welcomed by exchanges, custodians and users who favor a lighter regulatory touch.

Why it matters

The decision removes two potential sources of regulatory friction for the U.S. crypto ecosystem, preserving existing reporting thresholds while signaling that future rules may focus on more targeted risks. It also underscores the administration’s intent to shape a regulatory framework that balances oversight with industry growth, a stance that could influence how other jurisdictions approach digital-asset supervision.