Crypto Mixers Just Got a Big Win From Washington

TLDR

• FinCEN is withdrawing a 2023 proposal that labeled crypto mixing a primary money laundering concern.
• The agency is also pulling a 2020 proposal requiring ID checks for self-hosted wallet transactions.
• FinCEN said the mixing rule’s broad definition could harm legitimate privacy-focused crypto users.
• The withdrawals do not change any current rules since neither proposal was finalized.
• Crypto advocacy groups, including Coin Center, welcomed the decision.

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The US Treasury’s Financial Crimes Enforcement Network, known as FinCEN, has withdrawn two proposed crypto rules. The agency announced the move in a notice posted to the Federal Register on Monday.

🚨BREAKING: The U.S. Treasury and FinCEN WITHDRAW two major crypto proposals targeting self-custody and mixers.

• “Unhosted Wallet” KYC rule
• CVC mixing surveillance rule

If implemented, the rules could have significantly expanded reporting, record-keeping and transaction… pic.twitter.com/2C1tJtwGJG

— Coin Bureau (@coinbureau) October 5, 2026

One proposal, first introduced in October 2023, would have labeled international crypto mixing a “primary money laundering concern.” The other, from December 2020, would have required banks to verify identities tied to self-hosted wallet transactions.

FinCEN said the decision is part of what it called the Trump Administration’s deregulatory agenda. The agency stated it wants digital asset rules to be “fit-for-purpose.”

Why FinCEN Pulled the Mixing Rule

The 2023 proposal defined mixing broadly. It included pooling funds, splitting transactions, and using single-use wallets to obscure where crypto came from or where it went.

Banks and other institutions would have needed to report wallet addresses, transaction hashes, and IP addresses for these transactions. FinCEN said commenters raised concerns that this definition was too wide.

The agency said the rule could have created a heavy reporting burden. It also said the rule might have discouraged people from using mixers for privacy reasons that have nothing to do with crime.

FinCEN pointed to a July 2025 report from the President’s Working Group on Digital Asset Markets. That report said lawful users may use mixers to keep their financial activity private on public blockchains.

Still, FinCEN said it believes some bad actors use mixers to avoid detection. The agency said it will keep watching mixer activity for signs of illegal use.

The Self-Hosted Wallet Rule

The second withdrawn rule dates back to December 2020. It was proposed during the final weeks of the first Trump administration.

That rule would have required banks to verify identities for wallet transactions above $3,000. Transactions over $10,000 would have needed to be reported to FinCEN.

FinCEN said this proposal is also being dropped as part of its effort to update digital asset rules. The agency said it will not take further action on it.

Neither proposal was ever finalized. That means current rules for banks and crypto companies remain unchanged for now.

Coin Center, a crypto advocacy group, responded to the news in a blog post. The group said the mixing rule’s definition was overly broad and could have affected routine privacy practices used by everyday crypto holders.

Coin Center also said the wallet rule would have created unequal treatment for crypto transactions compared to other financial dealings.

The Crypto Council for Innovation also reacted. The group posted on X that the withdrawal is positive for the digital asset industry.

This news follows other recent regulatory changes. Treasury removed the crypto mixer Tornado Cash from its sanctions list back in March 2025 after a court ruling against the Office of Foreign Assets Control.

A separate Treasury report to Congress this past March acknowledged mixers can serve legitimate privacy purposes. Treasury declined to comment further when asked by reporters.