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FinCEN is withdrawing its 2023 proposal to require financial institutions to report details of crypto-mixing transactions, including wallet addresses, transaction hashes and IP addresses. The agency cited concerns that the proposal’s broad definition of mixing could chill legitimate activity and impose a large reporting burden. It is also withdrawing a 2020 proposal that would have required identity checks and recordkeeping for certain transactions involving self-hosted wallets.
Why it matters
The mixing proposal would have covered methods used to obscure transaction sources, destinations or amounts, including pooling funds, splitting transactions and using single-use wallets. FinCEN said it still believes illicit actors use mixers to hinder investigations, but cited a July 2025 report from the President’s Working Group on Digital Asset Markets recognizing that lawful users may use mixers for privacy on public blockchains.
Neither proposal was finalized, so the withdrawals do not change financial institutions’ existing obligations. The 2020 wallet proposal would have required reporting to FinCEN for transactions above $10,000, including multiple transactions totaling more than that amount in 24 hours. It also proposed identity checks and records for transactions above $3,000 involving certain unhosted wallets.
Market impact
The decision removes two proposed compliance regimes that crypto advocates argued could sweep ordinary activity into financial reporting requirements. Coinbase had objected that the mixing proposal had no dollar threshold, while Coin Center criticized both proposals’ breadth.
FinCEN says it will continue monitoring mixer activity and may take future steps to address illicit finance. The move follows Treasury’s March 2025 removal of Tornado Cash from its sanctions list after an appeals court found that OFAC exceeded its authority, and a Treasury report to Congress this March that acknowledged mixers’ legitimate privacy uses.
Frequently asked questions
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What information would the proposed crypto-mixing rule have required institutions to report?
Covered institutions would have reported mixing transactions with details including wallet addresses, transaction hashes and IP addresses.
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What were the proposed thresholds in FinCEN’s self-hosted wallet rule?
The proposal included identity checks and recordkeeping for certain transactions above $3,000, plus reporting for transactions above $10,000 or multiple transactions totaling more than $10,000 in 24 hours.
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Do the withdrawals change financial institutions’ current obligations?
No. Neither proposal was finalized, and FinCEN said withdrawing them does not change existing obligations.
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Why did FinCEN withdraw the crypto-mixing proposal?
FinCEN cited commenters’ concerns that its broad definition of mixing could chill legitimate activity and impose a large reporting burden on covered institutions.
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Does FinCEN plan to stop monitoring crypto mixers?
No. The agency said it will continue monitoring mixer activity for signs of illicit finance and may take steps in the future.
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