US Treasury Abandons Proposed Crypto Wallet and Mixer Reporting Rules

The scrapped rules included a 2020 proposal that would have mandated identity verification for crypto transfers exceeding $3,000 and reporting for those above $10,000. Additionally, the agency withdrew a 2023 finding that labeled international virtual currency mixing as a primary money laundering concern. Deputy Director Jimmy L. Kirby signed the notices, citing a need for regulations that remain fit-for-purpose and acknowledging concerns regarding compliance costs and the impact on legitimate privacy-focused activity.

Advocacy group Coin Center, which led the opposition against the measures, characterized the reversal as a victory for financial privacy. The organization had previously argued that the rules would have burdened institutions with tracking counterparty data for non-customers and potentially discouraged lawful use of privacy-enhancing technologies. While the Treasury noted that criminals continue to utilize mixing tools to obstruct investigations, the agency conceded that the broad scope of its previous definitions risked penalizing ordinary users. FinCEN stated it will continue to monitor financial sectors for illicit activity but opted to abandon these specific reporting frameworks in favor of more tailored approaches.