In brief
- FinCEN withdrew its 2020 "unhosted wallet" proposal, which would have required banks and money services businesses to keep records on self-custody wallet transactions over $3,000 and report those over $10,000.
- It also dropped a 2023 proposal to label international crypto mixing a "primary money laundering concern," citing concerns it could chill legitimate activity.
- Coin Center hailed the move but warned that Treasury still has the legal authority to propose similar rules.
Two of crypto's most hated surveillance proposals are officially dead.
The Treasury Department's Financial Crimes Enforcement Network, or FinCEN, withdrew its long-pending "unhosted wallet" rule and a separate proposal targeting crypto mixers, according to notices filed Monday and set for publication in the Federal Register on Tuesday.
Unhosted wallets, also called self-custodial wallets, are controlled directly by users rather than by an exchange or bank. FinCEN's December 2020 proposal, released in the final weeks of President Donald Trump's first term, would have required banks and money services businesses to keep records on customers' transactions with such wallets above $3,000 and to report transactions topping $10,000, including counterparty information. As Decrypt reported at the time, the plan effectively extended Bank Secrecy Act rules to personal wallets.
"FinCEN will take no further action on this NPRM," the agency wrote, using the shorthand for a notice of proposed rulemaking.
It's been a hard month for privacy and your right to use crypto. There's a bright spot.
Two rules at Treasury that Coin Center has vehemently opposed over the last several years have been officially withdrawn.
The "unhosted wallet rule" that would have made Coinbase and…
— Peter Van Valkenburgh (@valkenburgh) October 5, 2026
The second notice scraps a 2023 Biden-era proposal that would have designated international crypto mixing as a class of transactions of "primary money laundering concern" under the USA PATRIOT Act.
Mixing services pool and shuffle coins to obscure their trail. The proposal would have required financial institutions to report wallet addresses, transaction hashes, and IP addresses tied to suspected mixing, according to the notice. At the time, the move sought to brand mixers a national security threat.
→FinCEN said commenters had warned that the rule's expansive definition of mixing could chill legitimate activity. It added that it will keep monitoring mixers for illicit finance and may take steps in the future.
Both withdrawals cite the White House's July 2025 digital asset report. The mixer notice quotes the report's statement that the administration "supports the ability of lawful users of digital assets to privately transact on a public blockchain."
Coin Center, the Washington crypto policy group that fought both proposals for years, celebrated the news. "It's been a hard month for privacy and your right to use crypto. There's a bright spot," Executive Director Peter Van Valkenburgh wrote on X. He cautioned, though, that "the underlying statutory authority to create new, similar bad rules remains."
It's not the only fight over self-custody. Early last year, the Consumer Financial Protection Bureau floated an interpretive rule that would have brought wallets like MetaMask under consumer payment law, drawing pushback from industry stakeholders.