FinCEN pulls crypto mixer rule over privacy concerns

The US Treasury’s Financial Crimes Enforcement Network (FinCEN) has withdrawn its proposal to impose extra reporting on crypto mixing, saying its broad definition could chill legitimate activity and burden financial firms. In its withdrawal notice, FinCEN said it would keep monitoring mixers for signs of illicit finance. The move ends a proposed rule that could have required banks and other covered firms to send the agency detailed reports about certain transactions.

What would the 2023 proposal have required?

FinCEN first proposed the rule in October 2023 under Section 311 of the USA PATRIOT Act. It would have treated international convertible virtual currency mixing as a class of transactions of primary money laundering concern. That finding could have allowed the agency to require covered financial institutions to collect and report information about transactions involving mixing.

A mixer is a service or tool that makes it harder to trace where crypto came from, where it went, or how much was transferred. FinCEN’s proposed definition covered a wide range of methods, including pooling funds, splitting transfers into smaller transactions, using one-time wallets, swapping between digital assets, and delaying transactions.

Reports could have included the amount and type of crypto involved, the mixer used, customer wallet addresses, transaction hashes, dates, IP addresses, and a written description of the activity. The proposal also called for firms to keep identifying details about customers linked to covered transactions.

Why did FinCEN withdraw the proposal?

FinCEN said it took account of commenters’ concerns that the definition was too broad. They argued it could sweep in lawful activity and create a large reporting burden for covered financial institutions. A July 2025 report from the President’s Working Group on Digital Asset Markets had also said lawful users may use mixers to protect privacy when transacting on public blockchains.

The Block’s report on the withdrawal said the notice was posted to the Federal Register’s public inspection site on October 5. The withdrawal took effect on October 6, according to the published notice. FinCEN Deputy Director Jimmy L. Kirby signed it.

The agency said it still believes illicit actors use mixers and other methods to hinder law enforcement investigations. It plans to keep monitoring mixer activity and may take steps later to address money laundering, terrorist financing, or other illicit finance. The withdrawal ends this proposal; it does not mean FinCEN has stopped monitoring crypto mixers.

Sources

• withdrawal notice — fincen.gov
• report on the withdrawal — theblock.co