FinCEN Withdraws Rules Targeting Crypto Wallets and Mixers

Under the 2020 wallet proposal, transfers above $3,000 tied to a self-hosted wallet would have meant record-keeping and ID checks at banks. On Monday, the Financial Crimes Enforcement Network (FinCEN) rescinded two proposed rules, one on self-custody wallets and another on crypto mixers. In the decision, the Treasury bureau cited the Trump administration’s “deregulatory agenda” in ending the wallet proposal that had been pending since December 2020. What the Withdrawn Rules Would Have Required One withdrawn rule, first published on December 23, 2020, targeted what it called unhosted wallets, meaning wallets where no bank or other financial institution runs transactions for the user. Banks and money service businesses would have had to file a report and verify the customer’s identity when a counterparty used such a wallet and a transfer topped $10,000, or several added up to more than $10,000 in 24 hours. Record-keeping would have started at $3,000, with wallets held at foreign institutions outside the Bank Secrecy Act, in jurisdictions the agency named, being covered too. The second proposal, from 2023, would have imposed a special measure on crypto mixing, where coins from many us...