FinCEN drops 2023 crypto-mixing proposal over privacy concerns

FinCEN withdrew its 2023 crypto-mixing proposal effective Oct. 6, ending a plan to require financial firms to report details of certain mixing transactions. The Federal Register withdrawal notice says commenters warned the proposal’s broad definition could chill legitimate activity and create a large reporting burden.

The Financial Crimes Enforcement Network, a Treasury bureau, said it still believes illicit actors use mixers to obstruct investigations. It will keep monitoring activity for money laundering, terrorist financing and other illicit finance, and may take steps later.

What would the withdrawn mixing rule have required?

FinCEN first proposed the rule in October 2023 under Section 311 of the USA PATRIOT Act. It would have treated international convertible virtual currency mixing as a class of transactions of primary money-laundering concern and imposed extra reporting and recordkeeping duties on covered financial institutions.

The proposal covered transactions that obscure a cryptocurrency transfer’s source, destination or amount. The The Block’s report on the withdrawal says examples included pooling funds, splitting transfers across transactions, using single-use wallets and delaying activity so deposits and withdrawals could not be matched by timing.

Reports would have included details such as wallet addresses, transaction hashes and IP addresses, according to the notice and The Block. A mixer could mean a person, service, code or tool that facilitates those obfuscating transactions.

Why did FinCEN pull the proposal?

FinCEN said public comments raised concerns that the definition swept in lawful privacy uses as well as illicit activity. It also cited the July 2025 report by the President’s Working Group on Digital Asset Markets, which said lawful users may use mixers to gain financial privacy on public blockchains and recommended that Treasury consider next steps.

The withdrawal does not mean FinCEN has concluded mixers are harmless. The agency says illicit actors continue to use them, while also recognizing that the proposal could have reached legitimate activity. The rule never took effect, and The Block reports that withdrawing it does not change financial institutions’ existing obligations.

What should crypto users watch next?

There is no replacement rule or new deadline in the withdrawal notice. FinCEN says it will continue monitoring mixers and may take future action if it sees signs of illicit finance.

Watch for a new FinCEN proposal or enforcement step. Until then, the agency’s next signal is what it does with the monitoring it says will continue.

Source material

• Federal Register withdrawal notice — federalregister.gov
• The Block’s report on the withdrawal — theblock.co