Hassan Maishera
TL;DR
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FinCEN withdrew proposed reporting rules covering self-custody wallets and crypto mixing transactions.
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The wallet proposal would have required reports for transfers exceeding $10,000, including transactions aggregated over 24 hours.
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Banks and crypto exchanges would also have needed to collect information about customers and counterparties.
FinCEN Ends Two Pending Crypto Rulemaking Efforts
The U.S. Treasury Department has withdrawn two proposed rules that would have expanded information collection and reporting requirements for certain cryptocurrency transactions.
The Financial Crimes Enforcement Network, known as FinCEN, withdrew the proposals Sunday. One addressed transfers involving wallets controlled directly by users, while the other targeted transactions involving crypto mixers.
Neither proposal had taken effect. Their withdrawal therefore ends pending rulemaking efforts rather than repealing reporting obligations that businesses were already required to follow under those proposals.
FinCEN said the decisions formed part of the Trump administration’s deregulatory agenda and an effort to make digital-asset regulation “fit-for-purpose.”
The move closes two longstanding debates over how financial institutions should handle cryptocurrency activity involving self-custody and transaction privacy.
The wallet proposal originated in December 2020, during the final weeks of the first Trump administration.
It would have required banks and money-service businesses, including cryptocurrency exchanges, to file reports when customers transferred more than $10,000 in crypto to or from so-called unhosted wallets.
The threshold would also have applied when multiple transactions, added together over a 24-hour period, exceeded $10,000. Splitting a transfer into smaller amounts would therefore not necessarily have placed the activity outside the proposed reporting requirement.
Businesses would also have needed to collect information about the customer and the wallet counterparty involved in the transaction.
The proposal focused on transfers connecting regulated financial businesses with wallets outside a custodial institution. It did not become a final, effective rule despite remaining under consideration for almost six years.
Unhosted Wallets Give Users Direct Control
An unhosted wallet, also commonly described as a self-custody wallet, is one in which the user controls the private keys.
Those keys allow the holder to authorize transactions. This differs from keeping cryptocurrency with an exchange or bank that manages custody on the customer’s behalf.
The proposed rule would have added reporting and information-gathering requirements when customers moved larger amounts between these wallets and covered financial businesses.
Its scope made the distinction between custodial services and user-controlled wallets central to the debate. The proposal attracted thousands of public comments but remained unresolved.
With its withdrawal, FinCEN has ended that particular attempt to establish additional requirements for the covered transfers.
FinCEN separately withdrew a proposal introduced in 2023 concerning cryptocurrency mixing transactions.
That measure would have classified those transactions as a category of primary money-laundering concern, enabling the government to impose additional reporting requirements on financial institutions handling them.
Like the wallet proposal, the mixer measure never took effect. Its withdrawal removes the pending proposal rather than undoing an implemented rule.
Although both initiatives concerned cryptocurrency reporting, they addressed different activities. The older proposal focused on large transfers involving self-custody wallets, while the later measure targeted transactions involving mixing.
Their simultaneous withdrawal reflects FinCEN’s stated reassessment of both approaches.
Agency Cites a Different Regulatory Direction
FinCEN linked the withdrawals to the administration’s broader push to reduce regulatory burdens and tailor digital-asset rules more closely to their intended purposes.
The immediate consequence is procedural: financial institutions will not face new obligations arising from these two proposals.
The announcement does not establish a blanket exemption for self-custody transfers or mixing activity from other applicable requirements.
It specifically ends the wallet proposal introduced in 2020 and the mixer proposal introduced in 2023, bringing both unfinished rulemaking efforts to a close.
