U.S. Treasury's FinCEN withdraws proposed crypto mixing rule and self-hosted wallet reporting requirements, citing concerns about chilling legitimate activity.
Regulation & Gov ·
The U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) has withdrawn a proposed rule targeting cryptocurrency mixing services, citing concerns about a chilling effect on legitimate activity. The agency simultaneously withdrew a separate 2020 proposal that would have required reporting and recordkeeping for transactions involving self-hosted wallets, effectively shelving both regulatory initiatives.
The mixing rule had aimed to impose obligations on service providers that facilitate the blending of cryptocurrency transactions, while the self-hosted wallet proposal would have expanded FinCEN's visibility into peer-to-peer transfers. Both rules had faced industry pushback over their scope and compliance burden, with critics arguing they could discourage ordinary users from employing privacy-preserving tools and non-custodial infrastructure.
The withdrawal marks a reversal of enforcement direction on these particular mechanisms, though it remains unclear whether FinCEN intends to pursue alternative approaches to the underlying compliance and anti-money-laundering objectives, or whether the agency has deprioritized oversight of these activity categories altogether.