FinCEN formally withdrew two long-pending crypto surveillance proposals on Monday—the 2020 "unhosted wallet" record-keeping rule and a 2023 plan to designate international crypto mixing a "primary money laundering concern"—according to Federal Register notices set for publication Tuesday.

The Treasury Department's Financial Crimes Enforcement Network filed both withdrawals this week, closing a multi-year uncertainty over how banks and money services businesses treat transactions involving self-custody wallets and coin-mixing services.

What would the unhosted wallet rule have required?

FinCEN's December 2020 notice of proposed rulemaking, released in the final weeks of President Donald Trump's first term, would have required banks and money services businesses to maintain records on customer transactions with unhosted wallets above $3,000 and to file reports on transactions exceeding $10,000, including counterparty information.

The proposal effectively extended Bank Secrecy Act obligations to personal wallets, requiring custodial platforms to collect identifying details on users sending funds to private addresses. Unhosted wallets—also called self-custodial wallets—are controlled directly by users rather than by exchanges or custodial intermediaries.

"FinCEN will take no further action on this NPRM," the agency wrote in its withdrawal notice, using shorthand for notice of proposed rulemaking.

Why did FinCEN drop the mixer proposal?

The second withdrawal eliminates a Biden-era proposal that would have designated international crypto mixing as a class of transactions of "primary money laundering concern" under the USA PATRIOT Act. Mixing services pool and shuffle coins to obscure transaction trails; the proposed rule would have required financial institutions to report wallet addresses, transaction hashes, and IP addresses tied to suspected mixing activity.

FinCEN said commenters had warned that the rule's expansive definition of mixing could chill legitimate privacy-preserving activity. The agency added that it will continue monitoring mixers for illicit finance and may take additional steps in the future.

What did the administration cite as justification?

Both withdrawal notices reference the White House's July 2025 digital asset report. The mixer notice quotes the report's statement that the administration "supports the ability of lawful users of digital assets to privately transact on a public blockchain."

How is the crypto policy sector responding?

Coin Center, which has litigated and lobbied against both proposals for years, welcomed the news. Executive Director Peter Van Valkenburgh wrote on X: "It's been a hard month for privacy and your right to use crypto. There's a bright spot."

Van Valkenburgh, however, cautioned that Treasury still holds the legal authority to revisit either subject. "The underlying statutory authority to create new, similar bad rules remains," he warned.

What enforcement window remains?

FinCEN's withdrawal closes neither the broader debate over self-custody oversight nor the underlying statutory authorities. Earlier this year, the Consumer Financial Protection Bureau floated an interpretive rule that would have brought wallets like MetaMask under consumer payment law, drawing pushback from industry stakeholders including wallet developers and DeFi projects.

Treasury's continued monitoring of mixing services leaves open the possibility of future rulemaking, and the Bank Secrecy Act provisions at the heart of both withdrawn proposals remain available to future administrations. FinCEN's stated openness to revisit the mixer designation in particular means the policy fight has paused rather than ended.