Fincen scraps crypto mixer rule built to fight ransomware

• Key insight: Fincen withdrew its first-ever proposal to treat an entire class of transactions, international crypto mixing, as a primary money-laundering concern.
• Supporting data: Fincen estimated about 15,000 institutions would have filed the mixer reports, spending a combined 1.47 million hours a year.
• Forward look: Fincen said it will keep monitoring mixers and "may take appropriate steps in the future."

Overview bullets generated by AI with editorial review.

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The Treasury Department's financial crimes bureau is scrapping a proposed rule that would have made banks report customer transactions tied to foreign cryptocurrency mixers.

Mixers are services that pool and shuffle crypto from many users to hide where any of it came from. The Financial Crimes Enforcement Network, or Fincen, posted a notice Monday withdrawing its October 2023 proposal targeting them.

The proposal was the first time Fincen had used section 311 of the USA Patriot Act, which lets Treasury impose special measures such as extra reporting requirements on money-laundering threats, against a whole class of transactions rather than a specific foreign bank or country.

Fincen had built its case largely on ransomware gangs and North Korean thieves, who use mixers to launder extorted and stolen funds. North Korea uses these laundered funds to support its weapons programs, Treasury reported earlier this year.