A rule that would have made exchanges report every transfer above $10,000 to a self-custodied wallet is dead, nearly six years after it was proposed and without ever having taken effect.
The Financial Crimes Enforcement Network, the US Treasury’s anti-money-laundering bureau, announced on 5 October that it was withdrawing two proposals. The first dates from December 2020, the final weeks of the first Trump administration. It covered what regulators call unhosted wallets, where the holder keeps the private keys rather than leaving coins with an exchange or a bank.
Banks and crypto businesses would have had to report transfers to such wallets above $10,000, including smaller ones adding up to that within 24 hours, and to keep records on those above $3,000.
The second proposal, from October 2023, would have labelled crypto mixing a class of transaction of primary money laundering concern, with extra reporting for financial institutions. Mixers pool and shuffle funds to obscure where they came from.
FinCEN said the withdrawals were part of the administration’s deregulatory agenda and its effort to make digital asset rules fit for purpose. On mixers, it accepted commenters’ argument that its expansive definition could have a chilling effect on legitimate activity.
It did not concede the underlying point. The bureau maintains that illicit actors continue to use mixers, and it has left itself room to come back with narrower measures.
Nothing already in force changes. Suspicious activity reports, the travel rule and the rest of the Bank Secrecy Act still apply to exchanges.
What is missing is the replacement. Mixers remain a favoured route for North Korean hackers moving stolen funds, and Treasury has not said what a fit-for-purpose rule would look like or when one might arrive.
