U.S. Treasury · Federal Reserve (FED) · The Block
The notice, signed by FinCEN Deputy Director Jimmy L
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A second notice posted Monday withdraws a 2020 proposal that would've required banks and money services businesses to verify the identities of users of self-hosted wallets.
Key facts
- The proposal would have required banks and money services businesses to verify customers' identities and keep records when a counterparty used an unhosted wallet, or a wallet at a non-Bank Secrecy
- FinCEN also cited the July 2025 report from the President's Working Group on Digital Asset Markets, which said "lawful users of digital assets may leverage mixers to enable financial privacy
- Treasury had already removed Ethereum-based mixer Tornado Cash from its sanctions list in March 2025, after an appeals court ruled that the Office of Foreign Assets Control had exceeded its authority
- Section 311 of the USA PATRIOT Act had never been used had never been used against a class of transactions before FinCEN proposed the rule
Summary
The U.S. Treasury Department's Financial Crimes Enforcement Network, known as FinCEN, is withdrawing its 2023 proposal targeting crypto mixing, citing concerns that the rule could have "a chilling effect on legitimate activity," according to a notice posted to the Federal Register's public inspection site on Monday. The notice, signed by FinCEN Deputy Director Jimmy L. The withdrawals end both rulemakings, and because neither proposal was finalized, the withdrawals do not change financial institutions' existing obligations. Monday's mixing notice withdraws FinCEN's October 2023 finding that international convertible virtual currency mixing is "a class of transactions of primary money laundering concern," along with the proposed rule attached to it. Under that proposed rule, banks and other covered institutions would have been required to file reports on mixing transactions with details down to wallet addresses, transaction hashes, and IP addresses.