US Treasury Withdraws Proposed Crypto Rules As Regulatory Framework Converges
FinCEN has scrapped proposed rules targeting self-custodial crypto transfers and mixing transactions as federal agencies align on new standards.
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US Treasury Withdraws Proposed Crypto Rules As Regulatory Framework Converges
FinCEN has scrapped proposed rules targeting self-custodial crypto transfers and mixing transactions as federal agencies align on new standards.
FinCEN Scraps Proposed Rules
The Treasury Department's financial crime enforcement arm, FinCEN, withdrew two proposed cryptocurrency rules on a Sunday, according to Federal Register notices 2026-20429 and 2026-20430. The scrapped proposals included a rule that would have required financial institutions to report crypto transfers exceeding $10,000 involving self-custodied wallets, and another that would have classified transactions utilizing crypto mixers as a primary money-laundering concern under Section 311 of the USA PATRIOT Act. Neither of the rules had ever taken effect.
As reported by Shaurya Malwa at CoinDesk, FinCEN framed the dual withdrawals as a step forward for the Trump administration's deregulatory agenda and its goal of creating fit-for-purpose digital-asset rules. The Digital Chamber expressed support for the move, noting that it eliminates regulatory pressure on self-custodial wallets while leaving existing Bank Secrecy Act requirements in place.
Background on the Withdrawn Proposals
The self-custody reporting rule dated back to December 2020, during the final weeks of the first Trump administration. It would have mandated that banks and money services businesses file reports for customer transactions surpassing $10,000 sent to or from unhosted wallets controlled by individuals rather than exchanges. Transactions crossing the threshold over a 24-hour aggregation window would have also triggered reporting obligations, requiring firms to collect counterparty identity and wallet data.
The mixer designation was introduced in October 2023 under Section 311 of the USA PATRIOT Act to designate all convertible virtual currency mixing transactions as primary money-laundering concerns. Financial institutions handling such transactions would have been required to report wallet addresses, transaction hashes, and IP addresses. FinCEN noted that the expansive definition of CVC mixing in the proposal posed risks of chilling legitimate activity and imposing heavy compliance burdens.
Federal Regulatory Convergence
The withdrawals coincide with ongoing efforts by multiple federal agencies building statute-level implementation rules converging on a January 18, 2027 effective date. The Federal Reserve published notices of proposed rulemaking in September implementing the GENIUS Act stablecoin framework for state member banks. Meanwhile, the SEC's Reg Crypto Assets NPRM remains open for comments until October 20, the Treasury's Section 3 NPRM closes on October 19, and the CFTC has released its CTX/CAM framework while excluding spot trading.
Data from Chainalysis published in October indicates that China's domestic peer-to-peer stablecoin transfers reached $104.1 billion annually, accompanied by significant growth.
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