FinCEN withdraws 2023 crypto hybrid rules due to concerns

The U.S. Treasury Department's Financial Crimes Enforcement Network withdraws two proposals for cryptocurrency regulation

The U.S. Financial Crimes Enforcement Network (FinCEN) is withdrawing two long-running proposals for cryptocurrency rules. The proposals were originally intended to expand reporting requirements for cryptocurrency mixers and self-custodial wallets, but the withdrawal does not change existing obligations of financial institutions. More recent proposals would designate international convertible virtual currency hybrid transactions as a "major money laundering concern" category of transactions under Section 311 of the American Patriot Act. Another proposal, which began in December 2020, would impose authentication, record-keeping and reporting requirements on specific transactions involving unmanaged wallets.

FinCEN stated that concerns about legitimate privacy purposes and compliance burdens led to its decision on currency mixers. The move follows a broader change in the Treasury Department's attitude towards blockchain privacy, which previously acknowledged the legitimate use of cryptocurrency mixers in a report to Congress.

Why abandon the cryptocurrency mixer proposal?

The scope of the 2023 proposal is extremely broad. FinCEN used Section 311 for the first time to target entire transaction categories rather than specific institutions or jurisdictions, identifying that the international mix of cryptocurrencies constitutes a major money-laundering concern. Under the proposed special measures, covered financial institutions will be required to report amounts they know or suspect are involved in mixed transactions. The information required may include the amount and type of cryptocurrency, wallet address, transaction hash, IP address, and customer identity information.

FinCEN的定义超出了传统的混币服务范畴，还包括资产池化、将转账拆分为多笔交易、使用一次性钱包、数字资产互换以及引入用户控制的交易延迟等技术手段。评论者认为，此类定义可能会捕捉到并非本质上可疑的普通区块链活动和隐私实践。FinCEN现在指出，这种范围可能会抑制合法活动，同时给受监管机构带来巨大的报告负担。

撤回并不意味着FinCEN现在认为混币器风险较低。该机构表示，非法行为者仍继续利用混币器阻碍调查，且该机构将继续监控用于洗钱、恐怖主义融资和其他非法金融活动的混合行为。

投资者启示

撤回降低了普通增强隐私的区块链活动自动触发联邦专门报告机制的风险。它并未取消现有的反洗钱要求，也不妨碍FinCEN针对与非法金融相关的特定服务。

自托管钱包规则的命运如何？

FinCEN is separately winding down a proposal made in the final weeks of the first Trump administration that would impose additional obligations on banks and money services companies that handle self-custodial wallets. The proposal requires that when transactions exceeding $3,000 involve unmanaged wallets or certain foreign-managed wallets, institutions must verify the identity of customers and maintain transaction and counterparty records. A single transaction exceeding US$10,000, or multiple transactions over a 24-hour period that cumulatively exceeds US$10,000, must be reported to FinCEN in addition to customer verification requirements.

The agency said it would take no further action on the proposal. Because the measure was never finalized, its withdrawal did not remove compliance requirements currently imposed on banks, exchanges or other money-services companies. Existing Bank Secrecy Act obligations still apply to regulated cryptocurrency companies.

Investor Revelation

Self-custody is not exempt from the broader U.S. financial crime framework. The actual change is that FinCEN will not implement the additional specific transaction verification and reporting architecture envisioned in the 2020 proposal.

Are U.S. policies on cryptocurrency privacy changing?

The two withdrawals are consistent with broader policy changes that increasingly distinguish between legitimate financial privacy and illegal efforts to conceal proceeds of crime. The President's Digital Asset Markets Working Group stated in July 2025 that legitimate digital asset users can use currency mixers to protect privacy on transparent public blockchains. The Treasury Department reiterated this position in a March 2026 report to Congress, although it still noted that currency mixers are often used by cybercriminals, ransomware groups, and state-affiliated actors.

The policy shift was also accompanied by a lawsuit against Tornado Cash. In March 2025, after a court challenged the government's power to sanction immutable smart contracts, the Ministry of Finance removed Ethereum-based currency mixers from its sanctions list. Subsequent court battles ended when the sanctions were lifted. As a result, FinCEN's latest action narrows down two proposed regulatory paths, but does not abandon enforcement of illegal cryptocurrency flows. For exchanges, wallet providers and investors, the line is becoming increasingly clear: the difference between the privacy technology itself and the behavior carried out through it.

Investor Revelation

These two withdrawals reduce two sources of regulatory uncertainty faced by self-custodial and privacy-conscious crypto infrastructures, but they are not general safe harbors for currency mixers. Future enforcement is more likely to focus on identifiable illegal activities and the existing anti-money laundering responsibilities of regulated intermediaries, rather than treating broad categories of private transactions as inherently suspicious.