FinCEN Withdraws Two Proposed Crypto Rules Affecting Financial Institutions

WASHINGTON—The Financial Crimes Enforcement Network is withdrawing two proposed rules that would have imposed additional requirements on financial institutions handling certain cryptocurrency transactions, including transactions involving unhosted wallets and virtual currency mixing.

FinCEN said it took the action after considering public comments and as part of the Trump Administration’s deregulatory agenda and effort to ensure digital asset regulations are “fit-for-purpose.”

One withdrawal ends a rule proposed in December 2020 that would have required banks and money services businesses to collect and retain information on certain transactions involving convertible virtual currency, or CVC, and unhosted wallets. The proposal included additional recordkeeping and identity-verification requirements for transactions exceeding $3,000 and reporting requirements for certain transactions exceeding $10,000.

FinCEN is also withdrawing its October 2023 proposal to designate CVC mixing as a class of transactions of “primary money laundering concern.” That proposal would have used FinCEN’s special measures authority to require covered financial institutions to report information involving transactions connected to CVC mixing, which FinCEN had said can be used to obscure the source, destination or amount of digital asset transactions.

Both withdrawals are scheduled for publication in the Federal Register on Oct. 6.