The Financial Crimes Enforcement Network formally withdrew two long-stalled crypto surveillance proposals on Monday, ending rulemakings that would have forced banks to report unhosted-wallet transactions and designated mixing as a primary money-laundering concern. Both withdrawal notices are scheduled to appear in the Federal Register on Tuesday, according to filings published by the Treasury bureau.

The first withdrawal kills FinCEN's 2020 "unhosted wallet" rule, which would have required banks and other financial institutions to report certain crypto transactions above $3,000 and $10,000 when customers held the assets in self-custodied wallets. The second scraps a 2023 proposal to classify international crypto mixing as a "class of transactions of primary money laundering concern" under Section 311 of the USA PATRIOT Act's special measures framework.

The move hands a policy victory to privacy advocates and the digital asset industry, which had fought both rules for years.

What did the withdrawn rules require?

The wallet rule would have extended currency transaction reporting and recordkeeping obligations to transfers involving wallets held outside regulated institutions, regardless of whether the counterparty could be identified.

The mixing proposal cast a far wider net. It defined mixing as anything that obscured the source, destination or amount of a crypto transaction — sweeping in pooled funds, split transfers, single-use wallets and even swaps between assets. Institutions would have had to hand over wallet addresses, transaction hashes, IP addresses and customer identity details.

FinCEN itself acknowledged in the withdrawal notice that commenters warned the definition "could have a chilling effect on legitimate activity" and would bury financial institutions in paperwork.

How did Coin Center respond?

The Washington-based crypto policy group Coin Center, which had opposed both rules, called the decision "a significant victory for financial privacy" in a Monday statement.

"The definition of mixing was extraordinarily broad, sweeping in common techniques used by ordinary cryptocurrency users to preserve their privacy," Coin Center said.

The group also argued the proposal's geography was unworkable in practice. "Because FinCEN acknowledged the difficulty of determining where a mixing transaction occurred, we argued that risk-averse financial institutions would inevitably report even purely domestic transactions, with potentially severe collateral consequences for innocent users, including account restrictions or closures," Coin Center said.

Does this follow White House policy?

The reversal tracks an explicit administration directive. A July 2025 report from the President's Working Group on Digital Asset Markets stated that "the Trump Administration supports the ability of lawful users of digital assets to privately transact on a public blockchain," and urged the Treasury to reconsider the mixing rule. The report acknowledged that criminals use mixers to launder funds but noted that lawful users depend on the same tools for financial privacy.

Is enforcement off the table?

FinCEN is not giving mixers a blanket pass. The agency said illicit actors "continue to use mixers and other tools and methods to hinder law enforcement investigations," and it will keep monitoring for money laundering and terrorist financing. The withdrawal notices leave the door open to future action, meaning mixing services remain exposed to targeted measures even as the economy-wide reporting mandate disappears.

For compliance teams at banks and money transmitters, the practical consequence is the removal of two prospective data-collection obligations that would have reshaped crypto transaction monitoring. Firms retain existing Bank Secrecy Act duties, but the special-measures reporting regime for mixing transactions and lowered unhosted-wallet thresholds will not take effect — and any successor proposal would require a fresh notice-and-comment cycle before it could bind institutions.