FinCEN Withdraws Crypto Rules Targeting Mixers And Unhosted Wallets

TL;DR

• FinCEN has withdrawn two proposed digital-asset rules covering unhosted-wallet transactions and convertible virtual currency mixing.
• Both proposals had remained unfinished for years and would have added new recordkeeping or reporting obligations for financial institutions.
• The withdrawals do not remove the AML and KYC rules that already apply to regulated crypto businesses.

Two long-running U.S. crypto rule proposals have finally been taken off the table.

The Financial Crimes Enforcement Network said on October 5 that it is withdrawing separate proposals dealing with transactions involving unhosted wallets and convertible virtual currency mixing.

Neither rule ever became final, but both had hung over the industry as examples of how far transaction-level reporting requirements could be extended.

Two Old Proposals Are Now Formally Dead

The first proposal would have imposed additional recordkeeping, verification and reporting requirements on certain transactions involving convertible virtual currencies and unhosted wallets.

The second involved a special measure aimed at cryptocurrency mixing activity.

FinCEN said it considered the public comments received on the proposals before withdrawing them. The agency framed the move as part of a wider effort to make digital-asset regulation more fit for purpose.