The U.S. Treasury announced on Oct. 5 that it would formally withdraw two proposed rules from 2020 and 2023 that would have required financial institutions to collect and report information about self-custody crypto wallets and mixing transactions. The move, published in the Federal Register on Oct. 6, follows a series of industry concerns and legal questions raised about the scope and cost of the proposals.

FinCEN, the Treasury bureau that enforces the Bank Secrecy Act, filed two separate withdrawal notices signed by Deputy Director Jimmy L. Kirby. Both notices cited the July 2025 report of the President’s Working Group on Digital Asset Markets as part of the rationale for pulling back the measures.

The first proposal, originally issued in December 2020, would have required banks and money‑services businesses to gather identifying information on transfers involving wallets held outside regulated institutions. Transfers exceeding $3,000 would have triggered recordkeeping requirements, while those above $10,000 would have required a FinCEN report. The rule also covered foreign wallets in jurisdictions identified by FinCEN and aimed to close gaps in anti‑money‑laundering controls for digital assets.

Industry groups, including Coin Center, had objected to the proposal on privacy grounds, arguing that it could force institutions to retain data about non‑customer counterparties and impose significant compliance costs. Coin Center described the withdrawal as a “major win for financial privacy.”

A second notice withdrew a 2023 finding that classified certain international crypto‑mixing services as a class of transactions of primary money‑laundering concern under Section 311 of the USA PATRIOT Act. The finding had proposed expanded reporting for mixing activity, including pooling of funds, use of single‑use wallets and delayed transfers. FinCEN acknowledged concerns that the definition could chill legitimate privacy‑preserving uses and indicated it would continue monitoring illicit activity but take no further action on the proposal at this time.

FinCEN’s recent analysis of scam activity, released on Sep. 4, identified roughly $12.7 billion in suspicious transfers linked to approximately 33,904 BSA reports filed between September 2023 and December 2025. Money‑services businesses accounted for 55 % of those reports, while banks contributed the remainder. The agency cautioned that the aggregate figure does not directly measure victim losses, as reports may include attempted or duplicate submissions.

The withdrawals reflect a broader reassessment of how crypto‑related transactions should be regulated, balancing anti‑money‑laundering goals with concerns about privacy and regulatory burden. No new deadlines or alternative rules have been announced.