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On Friday, the US Treasury's Financial Crimes Enforcement Network and the Federal Reserve Board of Governors rescinded a 2020 proposal requiring financial institutions to collect information on cryptocurrency transactions of $250 or more. The proposed threshold would have fallen from $3,000, extending the Travel Rule to a much larger set of transactions. FinCEN said it withdrew the proposal after more than five years because the convertible virtual currency industry had changed and further public input would be useful.
Why it matters
FinCEN said future amendments to recordkeeping and Travel Rule requirements for convertible virtual currency should reflect recent developments and be fit for purpose. The language leaves room for a revised framework but ends the uncertainty surrounding the contested $250 threshold. For exchanges, custodians and other financial institutions, the decision removes a pending compliance burden tied to collecting data on a much broader set of transactions.
Coin Center had warned that lowering the threshold to $250 would pull ordinary transactions into what it called "warrantless financial surveillance." The group also noted that the rescission followed Treasury's withdrawal last month of proposed rules covering self-hosted wallets and cryptocurrency mixing. Crypto Council for Innovation CEO Ji Hun Kim called the decision the right call, saying the lower threshold would have placed an undue burden on institutions.
Market impact
The three withdrawals remove several long-pending proposals that would have expanded the Bank Secrecy Act surveillance regime for crypto firms. The immediate effect is less near-term compliance uncertainty for institutions serving US customers and no new $250 collection mandate under the withdrawn proposal. It also removes a specific regulatory overhang around cross-border transfers, self-hosted wallets and mixing activity.
FinCEN has not set a permanent replacement. The next watchpoint is whether regulators return with another proposal and how any revised framework balances illicit-finance controls with the transaction data and operational burden placed on lawful users.
Frequently asked questions
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What threshold did the rescinded crypto travel rule proposal set?
It proposed requiring financial institutions to collect information on crypto transactions of $250 or more, replacing the existing $3,000 threshold. The 2020 proposal was withdrawn on Friday.
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Why did FinCEN withdraw the crypto travel rule proposal?
FinCEN said more than five years had passed, the convertible virtual currency industry had changed, and additional public input would help determine whether future amendments were fit for purpose.
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Which agencies rescinded the crypto travel rule proposal?
FinCEN and the Federal Reserve Board of Governors rescinded the proposal on Friday. FinCEN said future changes to recordkeeping and Travel Rule requirements for CVC should reflect recent industry developments.
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How did Coin Center and Crypto Council for Innovation react?
Coin Center welcomed the withdrawal, while Crypto Council for Innovation CEO Ji Hun Kim called it the right decision. Coin Center warned of "warrantless financial surveillance," while Kim cited the burden on institutions.
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What other crypto proposals did Treasury withdraw last month?
Treasury withdrew proposed rules covering self-hosted wallets and cryptocurrency mixing. Coin Center said the three withdrawals together close several long-pending proposals that would have expanded Bank Secrecy Act surveillance.
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