FinCEN withdraws its 2020 unhosted-wallet proposal and its 2023 crypto-mixing proposal
Victoria Shinder1 min readThe US Treasury's Financial Crimes Enforcement Network (FinCEN) said in a notice on 5 October that it is withdrawing two proposed rules aimed at crypto, Cointelegraph reports.
Which rules. The first, proposed in December 2020, would have imposed recordkeeping, verification and reporting requirements on certain crypto transactions involving unhosted wallets. The second, proposed in October 2023, concerned "convertible virtual currency mixing".
FinCEN's reasons. The notice says the mixer rule "could have a chilling effect on legitimate activity and place a large reporting burden on covered financial institutions", and that FinCEN considered the comments received on both proposals. It describes the withdrawals as part of "the Trump Administration's deregulatory agenda and ongoing efforts to ensure digital asset regulations are fit-for-purpose".
Reaction. The Crypto Council for Innovation called the move positive for the digital asset ecosystem.
Context. The withdrawal came on the same day the Commodity Futures Trading Commission began a rulemaking process for crypto transactions under its existing statutory authority. Neither withdrawn proposal had become a final rule, so for exchanges and wallet providers the practical effect is the removal of obligations that were pending rather than the lifting of ones in force.