The U.S. Treasury Department's Financial Crimes Enforcement Network is planning to withdraw two cryptocurrency surveillance proposals that have sat unfinished for years. One would have forced banks and money transmitters to collect identifying information on transactions involving self-hosted wallets above $3,000, and to report those above $10,000. Neither rule ever took effect.
The proposals were aimed squarely at self-custody and privacy tools, including mixers. Their formal withdrawal would close a chapter that crypto advocates have been fighting since the rules were first floated.
What the two proposals would have done
The first rule, as drafted, would have applied to banks and money services businesses. For any transaction to or from a self-hosted wallet above the $3,000 threshold, those institutions would have been required to verify the identity of the counterparty and keep records. Transactions above $10,000 would have triggered a reporting requirement to FinCEN, similar to the currency transaction reports banks already file for large cash movements.
The second proposal focused on privacy-enhancing tools. It sought to impose additional recordkeeping and reporting obligations on transactions involving mixers — services that pool and shuffle coins to obscure their origin. That rule never got off the ground either.
Why it stalled — and why it's being pulled now
Both proposals had been pending for years without being enacted into law. They were introduced during a period of heightened concern about illicit finance in crypto, but they ran into a wall of opposition from the industry, privacy advocates, and some lawmakers who argued they would sweep in ordinary users and stifle legitimate self-custody.
FinCEN's decision to scrap them now, rather than push forward, signals a shift in priorities at the Treasury unit. The agency hasn't said what, if anything, will replace them. The proposals are being withdrawn, not rewritten — at least for now.
The self-custody fight isn't over
For crypto users who hold their own keys, the withdrawal is a clear win. But it doesn't mean the regulatory pressure on self-hosted wallets and privacy tools has disappeared. Other agencies and lawmakers have pursued their own angles on the same issues, and the underlying concerns about illicit finance that drove the original proposals haven't gone away.
The practical effect is that the specific recordkeeping and reporting requirements outlined in these two rules won't become part of the U.S. anti-money-laundering regime. Banks and money transmitters won't have to collect counterparty data on those self-hosted wallet transactions, and mixers won't face the additional obligations that were proposed.
What happens next depends on whether FinCEN decides to propose something narrower in their place, or whether it leaves the space alone. The agency hasn't indicated a timeline for any follow-up. For now, the rules that never were are formally on their way out.
