Six years of regulatory threat ended Monday when FinCEN killed two proposed rules that would have forced banks and crypto exchanges to surveil transactions flowing to and from personal crypto wallets and through privacy-enhancing mixing services. Neither rule ever took effect, but both had hung over the industry since 2020 and 2023 respectively, shaping how businesses thought about accepting cryptocurrency.
The first withdrawal, published in the Federal Register on October 6, 2026, scraps a December 2020 proposal that would have required banks and money services businesses to verify customer identities, keep records on transactions above $3,000, and file reports on transfers above $10,000 involving self-hosted wallets. The second withdrawal pulls a 2023 proposal that classified international crypto mixing as “a class of transactions of primary money laundering concern” under Section 311 of the USA PATRIOT Act.
Why FinCEN reversed course
In its withdrawal notice, signed by Deputy Director Jimmy L. Kirby, the agency acknowledged that commenters warned the mixing rule’s broad definition “could have a chilling effect on legitimate activity.” FinCEN said the withdrawals are part of the Trump Administration’s deregulatory agenda and an effort to make digital asset rules “fit-for-purpose,” referencing a July 2025 White House crypto report that supported lawful private transactions on public blockchains.
For small businesses that accept Bitcoin or other cryptocurrencies, the practical result is straightforward. The prospect of exchanges being required to identify and report your counterparties when you move crypto to your own wallet is gone, at least for now. That removes a layer of friction that could have discouraged customers from using crypto for everyday purchases.
What stays in place
The withdrawals do not erase existing obligations. The Bank Secrecy Act’s anti-money-laundering and suspicious-activity reporting requirements still apply to any regulated crypto business. IRS tax reporting through Form 1099-DA is unaffected. And OFAC sanctions on specific mixer protocols remain a separate matter entirely.
FinCEN also left a door open on mixing. The agency said it “will continue to monitor activity” involving mixers and may act in the future if it identifies money laundering or terrorist financing risks. That means businesses in the privacy-tool space should not treat this as permanent deregulation.
The American Banker noted that FinCEN originally built its case on ransomware gangs and North Korean hackers who use mixers to launder stolen funds. Whether political winds shift the agency back toward surveillance-style rules in a future administration is the question now hanging over every business that just breathed a sigh of relief.
