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The Financial Crimes Enforcement Network (FinCEN) has withdrawn its 2023 proposal to identify international cryptocurrency mixed-currency services as a major money laundering risk and its 2020 proposal to require reporting of non-custodial wallet transactions. The agency pointed out that overly broad definitions in mixed-currency rules could have a "chilling effect" on legitimate activities and place a huge reporting burden on financial institutions.
Two withdrawal notices were issued by Deputy Supervisor Jimmy L. Kirby signed it and published it in the Federal Register on Tuesday.
FinCEN cited the chilling effect on legitimate users
FinCEN said a broad definition of mixed-currency rules could have a "chilling effect on legitimate activities" and place a "heavy reporting burden" on regulated financial institutions. The decision follows a July 2025 presidential task force report that found that "legitimate users of digital assets may use currency mixers to achieve financial privacy."
Another notice withdrawing the 2020 unmanaged wallet proposal said the move is in line with the Trump administration's efforts to ensure digital asset regulation is "fit for purpose." The rule would have required banks to verify identity and retain records of transactions involving non-custodial self-custodial wallets or foreign institutional wallets that exceed $3,000.
Industry groups say rules are too broad.
The Coin Center, a cryptocurrency policy nonprofit that opposes both rules, said the definition of the mixed-currency proposal is "extremely broad and includes common technologies used by ordinary cryptocurrency users to protect their privacy." 
The organization said wallet rules would create "double standards for cryptocurrency transactions" and encourage the collection of more sensitive financial data.
FinCEN said it will continue to monitor for signs of money laundering in currency mixing activities and reserves the right to take future actions.
The withdrawal is part of an overall tightening of cryptocurrency regulation at the federal level this year. Community banks also separately opposed the Treasury Department's approach. The American Association of Independent Community Bankers sued the Office of the Comptroller of the Currency this month, questioning the granting of National Trust Bank charters to cryptocurrency companies.
