FinCEN withdraws proposed crypto mixing rule over ‘legitimate activity’ concerns

What happened

The US Treasury’s Financial Crimes Enforcement Network (FinCEN) withdrew two proposed rules affecting its enforcement of crypto companies, including one on “convertible virtual currency mixing.” FinCEN said that the mixer rule, initially proposed in October 2023, “could have a chilling effect on legitimate activity and place a large reporting burden on covered financial institutions.”

According to a Monday notice, the agency will withdraw a December 2020 proposal that would have imposed “recordkeeping, verification, and reporting requirements” related to crypto transactions and unhosted wallets, as well as one affecting enforcement of crypto mixing services. “FinCEN has considered the comments submitted in response to these proposals and is withdrawing them as part of the Trump Administration’s deregulatory agenda and ongoing efforts to ensure digital asset regulations are fit-for-purpose,” the Monday notice said.