The US Treasury has withdrawn two Financial Crimes Enforcement Network proposals that had sought to expand reporting requirements around cryptocurrency transactions involving unhosted wallets and crypto mixers. The proposals had remained contentious for years and drew sustained opposition from Coin Center, which said they would broaden government collection of financial information on crypto users.
According to the source article, the move ends two separate rulemaking efforts launched under different administrations. Coin Center described the withdrawal as a major victory for financial privacy and for the ability of Americans to use cryptocurrencies without what it views as excessive surveillance.
Rule on unhosted wallets
One of the withdrawn proposals dated back to the final period of Donald Trump’s administration. It would have imposed added recordkeeping and reporting duties on financial institutions involved in transactions with so-called unhosted wallets.
Under that proposal, institutions would have been required to collect and retain counterparty information for transfers above $3,000. They also would have had to file reports for transactions starting at $10,000. Coin Center argued that this approach would create a stricter standard for crypto transfers than for comparable activity elsewhere in finance and would sweep in sensitive information about people who were not even customers of the reporting institution.
Mixer-focused proposal from 2023
The second proposal was introduced in 2023 during Joe Biden’s administration. It focused on activity involving crypto mixers that was tied to a foreign jurisdiction.
As described in the source article, the rule would have treated that type of activity as a category of transactions posing a primary money laundering concern. Financial institutions would then have been required to report transactions if they knew, suspected, or had reason to believe the activity was connected to crypto mixing.
Coin Center said the proposal used an overly broad definition of crypto mixing. In its view, that language risked covering ordinary privacy-preserving behavior and could push institutions to report domestic activity as well, not just the foreign-linked transactions the rule was meant to address.
Why the withdrawal matters
The Treasury’s decision removes two proposals that critics said could have significantly expanded the amount of financial data gathered about cryptocurrency users. Coin Center said the withdrawal shuts down an effort to increase financial surveillance through these rules.
The organization framed the outcome as a clear policy win for privacy, emphasizing that both proposals would have widened reporting obligations for institutions handling digital asset transactions. The source article does not indicate that replacement rules have been proposed at this stage.
What is confirmed now
What is confirmed from the source material is limited but clear: both FinCEN proposals have been withdrawn by the US Treasury. One dealt with reporting around unhosted wallet transactions above specific thresholds, and the other addressed suspected mixer-related activity linked to foreign jurisdictions.
The immediate next step is therefore the absence of these proposed reporting expansions, rather than the launch of a new framework. Any broader shift in US crypto surveillance policy would depend on future rulemaking that has not been described in the source article.
Source: incrypted.com