FinCEN withdraws its crypto mixing and unhosted wallet proposals
On 6 October 2026 FinCEN withdrew two long-pending proposals, the 2023 section 311 special measure on convertible virtual currency mixing and the 2020 unhosted wallet reporting rule, which had $10,000 reporting and $3,000 recordkeeping thresholds.
Two crypto rules that many BSA officers had filed under "might happen someday" are now off the table. On 6 October 2026 FinCEN published two short withdrawal notices, both effective that day. Neither proposal ever became a final rule, so nothing a bank or credit union was required to do has changed. What has changed is the list of things you might have been planning for.
The 2023 mixing proposal
The first notice (91 FR 63513) withdraws "the proposed rulemaking published at 88 FR 72701 (October 23, 2023)." That proposal, made under section 311 of the USA PATRIOT Act, found "that international Convertible Virtual Currency (CVC) mixing is a class of transactions of primary money laundering concern." It would have required covered financial institutions "to file a report with FinCEN containing certain information related to CVC Mixing transactions," including transaction hashes, IP addresses and a narrative, and to keep records on customers tied to those transactions.
FinCEN points to commenters who worried that "the expansive definition of CVC mixing in the proposed rule could have a chilling effect on legitimate activity." It also cites the July 2025 report of the President's Working Group on Digital Asset Markets, set up under Executive Order 14178, which said the administration "supports the ability of lawful users of digital assets to privately transact on a public blockchain."
FinCEN doesn't say mixing is harmless. It says "illicit actors continue to use mixers and other tools and methods to hinder law enforcement investigations," and that it "will continue to monitor activity involving CVC mixers" and may act again.
The 2020 unhosted wallet proposal
The second notice (91 FR 63514) withdraws "the proposed rule published at 85 FR 83840 (December 23, 2020)," and says FinCEN "will not take any further action on this NPRM."
That proposal would have required banks and money services businesses to report and verify identity for CVC or legal-tender digital asset transactions with a counterparty using an unhosted or "otherwise covered" wallet, where the transaction "is greater than $10,000, or multiple transactions that aggregate to greater than $10,000 in 24 hours." Recordkeeping would have kicked in "if a counterparty is using an unhosted or otherwise covered wallet and the transaction is greater than $3,000."
FinCEN's stated reason is short: the withdrawal is "part of the Trump Administration's ongoing efforts to ensure digital asset regulations are fit-for-purpose," following the same Working Group report.
Who it reaches
Both proposals were aimed at financial institutions handling convertible virtual currency: banks and money services businesses in the 2020 proposal, covered financial institutions in the 2023 one. A bank or credit union with no crypto activity, and no plans for any, was never close to these rules.
What it could mean
For most community banks and credit unions, this is housekeeping for the horizon list. If your risk assessment or board reporting still carries "pending FinCEN unhosted wallet rule" as an item to watch, it can come off. The 2020 proposal had been sitting for almost six years, and we suspect plenty of institutions had quietly stopped tracking it anyway.
We'd be careful about reading more into it than that. Withdrawing a proposal doesn't change your existing BSA obligations, and FinCEN went out of its way to say mixers are still used to hide illicit funds. If a customer's activity runs through a mixer, that's still a red flag your monitoring should catch and your investigators should weigh, with or without a dedicated rule.
There's also a timing pattern worth noticing. In the same week, FinCEN dropped two broad crypto proposals and proposed a targeted measure against one Russia-linked network. Our reading is that FinCEN is moving away from rules aimed at whole categories of crypto activity and toward named targets. For a small institution, that means less new reporting, and more weight on screening lists and alerts that change without much notice.