FinCEN Withdraws Crypto Mixer And Unhosted Wallet Surveillance Rules, Deputy Director Jimmy L. Kirby Signed

FinCEN withdraws two proposals

The Financial Crimes Enforcement Network withdrew two proposed crypto surveillance rules on October 5, including a 2023 proposal targeting international crypto mixing and a December 2020 proposal aimed at unhosted or self-custody wallets.

Deputy Director Jimmy L. Kirby signed both withdrawal notices, and the notices were scheduled for publication in the Federal Register on October 6.

FinCEN’s withdrawn mixing proposal had invoked Section 311 of the USA PATRIOT Act to designate international convertible virtual currency mixing as “a class of transactions of primary money laundering concern,” which would have required covered institutions to report transactions they knew or suspected involved mixing.

FinCEN’s withdrawn self-custody proposal would have required banks and money services businesses to verify customers and keep records for transactions involving unhosted wallets, with transactions above $10,000 triggering reporting to FinCEN.

The withdrawal left existing compliance duties unchanged because neither rule was ever finalized, and FinCEN said it would still monitor mixing activity for illicit finance and may take steps in the future.

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