FinCEN withdraws proposed crypto mixing rule

FinCEN’s 2023 proposal would have treated international convertible virtual currency mixing as a class of transactions of primary money laundering concern; on Oct. 5, 2026, the bureau announced it was withdrawing that proposal. The FinCEN announcement says the agency considered public comments and is withdrawing the rule as part of the administration’s deregulatory agenda and efforts to make digital asset regulations fit for purpose.

The withdrawal ends a proposed reporting regime that could have swept privacy-related transactions into financial institutions’ compliance systems.

What would the mixing proposal have required?

The proposed special measure would have required banks and other covered financial institutions to report transactions involving mixing to FinCEN. The Block’s report on the withdrawal says proposed reports could have included wallet addresses, transaction hashes and IP addresses.

The proposal’s definition covered methods of obscuring a transaction’s source, destination or amount. As The Block reports, examples included pooling funds, splitting transactions, using single-use wallets and delaying deposits or withdrawals so they could not be matched by timing. FinCEN had proposed the measure under Section 311 of the USA PATRIOT Act, which allows it to impose special measures against a class of transactions it identifies as a primary money laundering concern.

Why did FinCEN withdraw the proposal?

FinCEN said commenters raised concerns that the definition of convertible virtual currency mixing was too expansive, could chill legitimate activity and would impose a large reporting burden on covered financial institutions. The bureau also cited a July 2025 report from the President’s Working Group on Digital Asset Markets, which said lawful users may use mixers to preserve financial privacy when transacting on public blockchains.

The withdrawal does not mean FinCEN considers mixers free of illicit-finance risks. The Block reports that the bureau continues to believe illicit actors use mixers to hinder law-enforcement investigations. FinCEN said it would continue monitoring mixer activity and may take further steps in response to illicit finance.

What changes for financial institutions now?

FinCEN’s announcement also withdrew a separate 2020 proposal covering certain transactions involving convertible virtual currency and unhosted wallets. Neither proposal had been finalized. The Block reports that their withdrawal therefore does not change financial institutions’ existing obligations.

The two withdrawals close separate rulemakings: one focused on reporting transactions involving mixing, and the other on recordkeeping, verification and reporting for some transfers involving self-hosted wallets. FinCEN said it would take no further action on the withdrawn wallet proposal. The agency’s announcement places both decisions within its wider review of digital asset regulations.

Sources

• FinCEN announcement — fincen.gov
• report on the withdrawal — theblock.co