FinCEN formally withdrew two proposed digital-asset rules on Oct. 6, ending an effort to apply a special measure to international convertible virtual currency mixing and a separate 2020 proposal covering transactions involving unhosted or self-hosted wallets. The withdrawals mean neither proposal will proceed in its proposed form.
The Financial Crimes Enforcement Network said the action followed public feedback and supports the administration’s effort to develop digital-asset regulations tailored to the sector.
FinCEN withdraws the crypto-mixing special measure
In a notice published in the Federal Register, FinCEN withdrew its proposed special measure concerning convertible virtual currency mixing as a class of transactions under Section 311 of the USA PATRIOT Act.
The proposal had targeted international CVC mixing. Its withdrawal closes the rulemaking in the form put forward by the agency, rather than establishing the measure as a final requirement.
The self-hosted-wallet reporting proposal is also withdrawn
FinCEN simultaneously withdrew a separate proposal first issued in 2020. That measure would have required banks and money-services businesses to report certain transactions, retain records and verify customers involved in transactions with unhosted or self-hosted wallets.
The agency’s second Federal Register notice records the withdrawal of the proposal, which also addressed certain transactions involving convertible virtual currency or digital assets with legal-tender status.
Comments raised breadth and compliance concerns
FinCEN said commenters had warned that the proposed definition of crypto mixing was broad enough to chill legitimate activity and impose significant reporting burdens. The agency cited those comments in announcing both withdrawals.
In its announcement, FinCEN said the decision aligns with the administration’s objective of creating fit-for-purpose digital-asset regulations. The notices do not announce replacement rules or a timetable for new proposals.
