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Treasury withdraws FinCEN rules on self-custody wallets and crypto mixers

FinCEN’s December 2020 self-custody proposal would have required banks and money services businesses to record transactions above $3,000 and report those over $10,000.

Reported · Written up by our desk · Regulation

FinCEN, the Financial Crimes Enforcement Network, withdrew two long-pending Treasury proposals focused on crypto compliance, including a so-called unhosted wallet rule and a separate plan aimed at crypto mixers, according to notices filed Monday and scheduled for publication in the Federal Register on Tuesday.

Unhosted wallets, also known as self-custodial wallets, are controlled by users rather than by an exchange or bank. Decrypt reports that FinCEN’s December 2020 proposal would have required banks and money services businesses to keep records on certain transactions tied to self-custodial wallets above $3,000 and to report transactions topping $10,000, including counterparty information.

FinCEN said it would take no further action on the unhosted wallet notice of proposed rulemaking. Decrypt also notes that a separate notice scraps a 2023 proposal targeting crypto mixers as a primary money laundering concern.

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