FinCEN Withdraws Two Crypto-Related Proposed Rules

Effective October 6, 2026, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) withdrew two proposed rules that would likely have had a significant impact on transactions related to unhosted wallets and convertible virtual currency (CVC).

The first notice of proposed rulemaking (NPRM), initially promulgated in December 2020, would have applied verification, recordkeeping and reporting obligations under the Bank Secrecy Act (BSA) to certain transactions between hosted and unhosted wallets involving CVC or digital assets with legal tender status (LTDAs). The second NPRM, released in October 2023, would have imposed additional reporting and recordkeeping requirements on banks and other covered financial institutions for transactions involving CVC mixing within or involving a foreign jurisdiction.

Because the two proposed rules did not become final rules, their withdrawal does not impact existing BSA or related anti-money laundering (AML) requirements for financial institutions.

Overview of the withdrawn proposed rules

2020 proposed rulemaking

A hosted wallet is a digital account hosted by a third-party financial institution such as a bank or money services business (MSB), which allows the user to store, send and receive cryptocurrency using an account maintained by the host. Unhosted, or self-hosted, wallets are held by people themselves and not by a third-party financial institution or at an exchange. While hosted wallet providers are subject to the BSA and related AML requirements, persons that execute transactions on their own behalf through unhosted wallets generally are not subject to the BSA. The impetus for the rule, according to FinCEN, was to address this perceived regulatory gap in the AML regime and prevent the facilitation of money laundering via unhosted wallets.