Treasury Kills Crypto 'Unhosted Wallet' and Mixer Surveillance Rules

In brief

• FinCEN withdrew its 2020 "unhosted wallet" proposal, which would have required banks and money services businesses to keep records on self-custody wallet transactions over $3,000 and report those over $10,000.
• It also dropped a 2023 proposal to label international crypto mixing a "primary money laundering concern," citing concerns it could chill legitimate activity.
• Coin Center hailed the move but warned that Treasury still has the legal authority to propose similar rules.

Two of crypto's most hated surveillance proposals are officially dead.

The Treasury Department's Financial Crimes Enforcement Network, or FinCEN, withdrew its long-pending "unhosted wallet" rule and a separate proposal targeting crypto mixers, according to notices filed Monday and set for publication in the Federal Register on Tuesday.

Unhosted wallets, also called self-custodial wallets, are controlled directly by users rather than by an exchange or bank. FinCEN's December 2020 proposal, released in the final weeks of President Donald Trump's first term, would have required banks and money services businesses to keep records on customers' transactions with such wallets above $3,000 and to report transactions topping $10,000, including counterparty information. As Decrypt reported at the time, the plan effectively extended Bank Secrecy Act rules to personal wallets.