FinCEN withdraws proposed crypto mixing rule

FinCEN announced on 5 October 2026 that it is withdrawing its proposed crypto mixing rule, reversing a push to impose extra reporting on financial institutions handling transactions involving international mixing.

The US Treasury’s Financial Crimes Enforcement Network also announced the withdrawal of a separate self-hosted wallet proposal. Both formal notices are scheduled for Federal Register publication on 6 October, when the withdrawals take effect.

FinCEN is withdrawing the finding as well as the rule

FinCEN’s mixing withdrawal notice covers both the proposed rule and the finding that international crypto mixing was a class of transactions of primary money-laundering concern under section 311 of the USA PATRIOT Act.

Crypto mixing obscures the source, destination or amount of cryptocurrency transactions. The 2023 proposal would have required covered financial institutions to record and report details of transactions involving mixing outside the United States.

FinCEN’s original announcement in October 2023 presented the proposal as a response to terrorist financing, ransomware and state-backed cybercrime. It described the measure as its first use of section 311 to target a class of transactions.

Privacy concerns changed the agency’s decision

FinCEN cited commenters’ concerns that the proposal’s broad definition of mixing could discourage legitimate activity and impose a large reporting burden. Its withdrawal notice also cites the administration’s support for lawful users’ ability to transact privately on public blockchains.

The definition extended beyond dedicated mixer services to techniques including pooling funds, splitting transfers, using single-use wallets and delaying transactions. The proposed reporting could have captured wallet addresses, transaction identifiers and customer information.

Coin Center welcomed the reversal on 5 October. The crypto policy organisation, which opposed both proposals, argued that the mixing definition could reach ordinary privacy practices and enable broad financial surveillance. That is its assessment of the policy.

The second withdrawal concerns self-hosted wallets

FinCEN’s separate wallet notice withdraws a proposal published in December 2020. It concerned banks and money services businesses dealing with wallets controlled by their users, and certain wallets hosted abroad.

The wallet proposal also required customer identity verification and information about transaction counterparties. FinCEN says it will take no further action on that proposal, describing the withdrawal as part of efforts to make digital asset regulation fit for purpose.

FinCEN says it will continue monitoring mixers for money laundering, terrorist financing and other illicit finance, and may take further action in response to that activity.