The U.S. Treasury Department has withdrawn its proposed Bank Secrecy Act reporting rules targeting cryptocurrency wallets and mixing services, according to CoinGape.

The action retires Financial Crimes Enforcement Network (FinCEN) rulemaking initiated in December 2020 under then-Treasury Secretary Steven Mnuchin. That effort would have required banks and money services businesses to collect counterparty information on certain crypto transactions and to file expanded reports involving unhosted wallets held in self-custody.

What did the FinCEN proposal cover?

FinCEN's unhosted-wallet proposal would have required hosted wallet providers and money services businesses to file currency transaction reports on transfers above $3,000 routed to counterparties they did not identify through a customer-identification program. The rule also would have mandated recordkeeping on transfers above $10,000.

A companion proposal targeted mixing services, classifying them as elevated money-laundering risk and laying groundwork for expanded reporting on transactions routed through tumblers.

Who opposed the rule, and on what grounds?

Industry and civil-liberties groups filed technical comments during the comment period, which FinCEN extended from 15 days into early 2021. Coinbase, the Blockchain Association and the Chamber of Digital Commerce argued the thresholds would capture ordinary self-custody usage and that wallet ownership differs structurally from a bank-customer relationship. The Electronic Frontier Foundation warned that mandated recordkeeping on pseudonymous wallets would amount to financial surveillance.

Industry counsel also signaled an Administrative Procedure Act challenge over the abbreviated comment window. The Biden administration kept the proposal under extended review after January 2021.

What changes operationally for exchanges?

U.S. compliance teams at major hosted-wallet operators had begun engineering the proposed recordkeeping infrastructure. The withdrawal suspends those engineering projects, though firms remain bound by FinCEN's 2019 virtual-currency guidance and the broader travel rule applied to crypto asset service providers.

The withdrawal does not affect sanctions and enforcement against mixer operators. Treasury's Office of Foreign Assets Control continues to enforce its 2022 designation of Tornado Cash and successor actions, and FinCEN's standalone mixer enforcement posture is unchanged.

What replaces the rule?

Treasury has not opened a replacement notice-and-comment proceeding on equivalent reporting. The administration's posture, per CoinGape, prioritizes Congressional framework legislation over unilateral rulemaking.

That channel delays any new wallet-reporting thresholds indefinitely while Congress debates market structure. Exchanges should expect recordkeeping obligations, if they return, to arrive through legislative direction or a future administration's rulemaking, rather than the withdrawn FinCEN framework.