FinCEN drops 2023 crypto mixer reporting proposal
FinCEN withdrew its 2023 crypto mixing proposal on Oct. 5, citing privacy concerns and reporting burdens, ending a rulemaking that never took effect.
The Splyt Genesis Desk
The Treasury Department’s Financial Crimes Enforcement Network withdrew its 2023 proposal for reporting crypto mixing transactions on Oct. 5, citing concerns that its broad definition could chill legitimate activity. FinCEN’s withdrawal notice records the action as an NPRM withdrawal.
The proposal never took effect, so its withdrawal does not change financial institutions’ existing obligations, according to The Block’s report. For you, the immediate change is that this proposed reporting regime is no longer pending.
What would the mixer rule have required?
The 2023 proposal would have required banks and other covered institutions to report transactions they identified as involving crypto mixing. FinCEN had proposed treating international convertible virtual currency mixing as a class of transactions of “primary money laundering concern” under Section 311 of the USA PATRIOT Act.
The reports would have included details such as wallet addresses, transaction hashes and IP addresses. The proposal defined mixing broadly: it included pooling funds, splitting transactions, using single-use wallets and delaying transactions so deposits and withdrawals could not be matched by timing.
That breadth was central to the agency’s decision. FinCEN said commenters warned that the definition could capture legitimate privacy activity and create a large reporting burden for covered financial institutions.
Does the withdrawal mean FinCEN sees no risk?
No. FinCEN said it still believes illicit actors use mixers to hinder law enforcement investigations. It also said it will continue monitoring activity involving crypto mixers for signs of illicit finance.
The withdrawal changes the status of this proposal, not the agency’s stated concern about criminal use. FinCEN said it may take steps in the future to address that activity, but the notice does not set out a replacement rule or a timetable.
What should you watch next?
Watch for any new FinCEN action on mixer-related illicit finance. The agency has not announced a date for further action, so the next signal will be whether it publishes new guidance or starts another rulemaking.
For now, the 2023 proposal is withdrawn, and its proposed reporting requirements never became active. FinCEN’s stated next step is continued monitoring.
Source material
- FinCEN’s withdrawal notice — fincen.gov
- The Block’s report — theblock.co