FinCEN Withdraws Rules Targeting Crypto Wallets and Mixers

On Monday, the Financial Crimes Enforcement Network (FinCEN) rescinded two proposed rules, one on self-custody wallets and another on crypto mixers.

In the decision, the Treasury bureau cited the Trump administration’s “deregulatory agenda” in ending the wallet proposal that had been pending since December 2020.

What the Withdrawn Rules Would Have Required

One withdrawn rule, first published on December 23, 2020, targeted what it called unhosted wallets, meaning wallets where no bank or other financial institution runs transactions for the user.

Banks and money service businesses would have had to file a report and verify the customer’s identity when a counterparty used such a wallet and a transfer topped $10,000, or several added up to more than $10,000 in 24 hours.

Record-keeping would have started at $3,000, with wallets held at foreign institutions outside the Bank Secrecy Act, in jurisdictions the agency named, being covered too.

The second proposal, from 2023, would have imposed a special measure on crypto mixing, where coins from many users are blended so their origins are harder to trace. It rested on a finding under section 311 of the USA PATRIOT Act that international crypto mixing is a class of transactions of primary money laundering concern.

Had it become active, it would have required covered financial institutions to report any transaction they knew or suspected involved mixing with a foreign link, including amounts, wallet addresses, transaction hashes and IP addresses, and keep records of each customer’s full identity.

Deputy Director Jimmy L. Kirby signed the wallet notice, which states the bureau will take no further action and cites a July 2025 White House report from the President’s Working Group on Digital Asset Markets. FinCEN says it considered public comments submitted on both proposals before deciding to withdraw them.

Industry Reaction

The Crypto Council for Innovation (CCI), an industry group that had filed comments on the mixing proposal, called both withdrawals “positive for the digital asset ecosystem” in an X thread. It had warned that the proposal’s broad definition of mixing could capture legitimate activity, and it described the outcome as “the rulemaking process working.”

On wallets, CCI argued the withdrawal helps stop regulators from prohibiting or restricting self-hosted wallet use.

The decision comes as privacy-focused crypto services face legal pressure. For example, Samourai Wallet co-founders Keonne Rodriguez and William Lonergan Hill agreed to plead guilty over their mixing service, with prosecutors alleging the wallet processed more than $2 billion in illegal transactions and laundered over $100 million.

The founders’ lawyers had sought dismissal after an April 2025 Justice Department memo stated prosecutors would no longer pursue cases based on user actions or regulatory technicalities, and later alleged the officers withheld internal FinCEN communications suggesting Samourai was not a money transmitter.

Rodriguez and Hill were later sentenced to five years and four years in prison, respectively, with the judge at Rodriguez’s sentencing saying he had “used his talent to enable fraud.” Supporters like analyst Kyle Chasse insisted that the platform had been created to allow people to send crypto anonymously rather than to conceal wrongdoing.