FinCEN drops crypto mixer rule over privacy concerns

The US Treasury’s Financial Crimes Enforcement Network (FinCEN) has withdrawn a proposed rule on crypto mixing, saying its broad definition could chill lawful activity and burden financial firms. The agency announced the move on Oct. 5. Its withdrawal announcement says it considered public comments before pulling the proposal.

The rule, proposed in October 2023, would have required banks and other covered financial institutions to report certain transactions involving crypto mixing, a way to obscure where funds came from, where they went, or how much was sent. FinCEN also withdrew a separate proposal on transactions involving self-hosted wallets.

What would the crypto mixing rule have required?

Under the proposal, covered institutions would have had to report details such as the amount and type of crypto involved, wallet addresses, transaction records and IP addresses. The rule covered a range of ways to obscure transactions, including pooling funds, splitting transfers and using single-use wallets.

The 2023 proposal would also have classified international crypto mixing as a “primary money laundering concern” under Section 311 of the USA PATRIOT Act. That designation could have brought extra reporting and recordkeeping requirements for covered institutions. The proposal never took effect.

Why did FinCEN withdraw the proposal?

FinCEN said commenters warned that the proposal’s broad definition of mixing could sweep in legitimate activity and create a large reporting burden for financial institutions. The Federal Register withdrawal notice says the agency still believes criminals use mixers to hinder law enforcement investigations.

The notice also points to a July 2025 report from the President’s Working Group on Digital Asset Markets. It said lawful users may use mixers for financial privacy when transacting on public blockchains, and recommended that Treasury consider next steps on the proposal.

Will FinCEN still monitor crypto mixers?

Yes. FinCEN says it will continue to monitor mixers for signs of money laundering, terrorist financing and other illicit finance. It may take further steps to address that activity.

The withdrawal ends the proposed rulemaking. It does not remove any existing obligations for financial institutions, because the proposal was never finalized. The agency also withdrew a separate proposal that would have required recordkeeping, identity checks and reports for some transactions involving self-hosted wallets.

Sources

• withdrawal announcement — fincen.gov
• Federal Register withdrawal notice — public-inspection.federalregister.gov