The US Treasury’s Financial Crimes Enforcement Network (FinCEN) has formally dropped two long-contested crypto surveillance proposals. On Monday, October 5, 2026, FinCEN filed two withdrawal notices: one pulls the December 2020 “unhosted wallet” recordkeeping and reporting proposal, the other pulls the October 2023 crypto-mixing proposal along with the finding behind it. Both are scheduled for official publication in the Federal Register on Tuesday, October 6, 2026.
If you keep coins in your own wallet — a browser extension, a mobile app, a hardware device — and move them to and from exchanges, this one is about you. Here is what was withdrawn, why, and what stays exactly the same.
What FinCEN Withdrew
There are two separate notices, both signed by FinCEN Deputy Director Jimmy L. Kirby:
- FR Doc 2026-20430 — “Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets; Withdrawal.” This withdraws the December 2020 notice of proposed rulemaking (NPRM) on unhosted wallets.
- FR Doc 2026-20429 — “Proposal of Special Measure Regarding Convertible Virtual Currency Mixing, as a Class of Transactions of Primary Money Laundering Concern; Withdrawal.” This withdraws the October 2023 mixing proposal and the finding that came with it.
Neither proposal ever became a final rule. That detail matters for everything that follows.
The Unhosted Wallet Proposal, Explained
The unhosted wallet rule was proposed in December 2020, in the final weeks of President Trump’s first term. Under it, banks and money services businesses would have had to verify their customer’s identity and keep records of the transaction and the counterparty whenever that counterparty used an unhosted wallet — or a wallet held at a non-Bank Secrecy Act institution in a foreign jurisdiction identified by FinCEN — for transactions above $3,000.
Above $10,000, they would also have had to file a report with FinCEN, including information about the counterparty. Several transactions adding up to more than $10,000 within 24 hours would have counted too. In practice, a withdrawal from an exchange to your own wallet could have pulled the person on the other end into the paperwork.
That is now off the table. “FinCEN will take no further action on this NPRM,” the notice says.
The Mixer Proposal — and the Finding Behind It
The second notice deals with action taken in October 2023 under Section 311 of the USA PATRIOT Act. FinCEN had found that international convertible virtual currency mixing is “a class of transactions of primary money laundering concern,” and proposed a rule to go with it. Under that proposal, covered financial institutions would have had to report details of suspected mixing transactions, including wallet addresses, transaction hashes and IP addresses, as The Block and Decrypt also report.
FinCEN did not just drop the proposed reporting requirements. It also withdrew the 2023 finding itself — the formal determination that this class of transactions was a primary money laundering concern.
Why FinCEN Says It Pulled Them
For the mixer rule, FinCEN points to the public comments. The withdrawal, it says, is informed by commenters’ concerns that the proposal’s expansive definition of mixing “could have a chilling effect on legitimate activity” and place a large reporting burden on financial institutions. FinCEN still maintains that illicit actors use mixers to hinder investigations, and says it will keep monitoring mixer activity and may take steps in the future.
Both notices also cite the White House’s July 2025 digital asset report, and the mixer notice quotes its line that the administration “supports the ability of lawful users of digital assets to privately transact on a public blockchain.” In its announcement, per the ABA Banking Journal, FinCEN said it was withdrawing the proposals “as part of the Trump administration’s deregulatory agenda and ongoing efforts to ensure digital asset regulations are fit-for-purpose.” Law360 also covered the withdrawals.
Coin Center executive director Peter Van Valkenburgh welcomed the news, with a caveat. Writing on X on October 5, as reported by Decrypt, he said: “It’s been a hard month for privacy and your right to use crypto. There’s a bright spot.” He added that “the underlying statutory authority to create new, similar bad rules remains.”
What Does Not Change
This is where it is easy to overread the headline, so be precise:
- Exchange KYC stays. These were proposals that never took effect, so, as The Block notes, withdrawing them does not change financial institutions’ existing obligations. The Bank Secrecy Act and know-your-customer rules that already apply to US exchanges and other money services businesses are unchanged. Expect the same identity checks you go through today.
- This is not an endorsement of mixers. Withdrawing a proposed rule and a finding does not bless any mixing service. Sanctions and criminal cases are separate tracks, and FinCEN says it is still watching mixers for illicit finance.
- The door is not locked. FinCEN says it may act on mixers in the future, and as Coin Center points out, the statutory authority behind both drafts is still on the books.
- This is US-only. If you are in the Philippines or anywhere else, your local rules and your exchange’s own policies still apply, whatever Washington withdraws.
And as always on this site: this is news, not trade advice. Nothing here is a call on any token or price.
Jamoraquai Take
For nearly six years, a rule that treated your own wallet like a suspect sat on the shelf. It never took effect, but it hung over self-custody the whole time. Pulling it — and the mixer finding along with it — is a real win for ordinary wallet users.
But nothing was written into law. The statute that produced these drafts is still there, which means a future administration can write new ones. Enjoy the reprieve; just don’t mistake it for a permanent one.
Sources
- Federal Register — Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets; Withdrawal (FR Doc 2026-20430)
- Federal Register — Proposal of Special Measure Regarding Convertible Virtual Currency Mixing, as a Class of Transactions of Primary Money Laundering Concern; Withdrawal (FR Doc 2026-20429)
- Decrypt — Treasury Kills Crypto ‘Unhosted Wallet’ and Mixer Surveillance Rules (Oct 5, 2026)
- The Block — Treasury withdraws crypto mixing rule, citing concerns over ‘chilling effect on legitimate activity’ (Oct 5, 2026)
- ABA Banking Journal — FinCEN withdraws proposals on crypto recordkeeping (Oct 5, 2026)
- Law360 — FinCEN Nixes Plans For Crypto Mixer, Wallet Reporting Rules (Oct 5, 2026)
