FinCEN withdraws pending crypto reporting proposals on unhosted wallets and mixers

The Financial Crimes Enforcement Network on Tuesday withdrew two pending crypto proposals that would have placed new reporting and recordkeeping duties on financial institutions: a December 2020 plan covering transactions involving unhosted wallets, and an October 2023 plan aimed at international cryptocurrency mixing. Both withdrawals were published in the Federal Register on Oct. 6, 2026, and each notice says the withdrawal is made "as of October 6, 2026."

The unhosted-wallet proposal

The first notice, FR Doc. 2026-20430 (91 FR 63514–63515), withdraws the proposed rule published at 85 FR 83840 on Dec. 23, 2020. That proposal applied to banks and money services businesses (MSBs) handling transactions in convertible virtual currency (CVC) or digital assets with legal tender status. It covered transactions where the counterparty used an unhosted wallet, or an "otherwise covered" wallet, which the notice describes as a wallet held at a financial institution that is not subject to the Bank Secrecy Act and is located in a foreign jurisdiction identified by FinCEN. Under the proposal, the notice says, the term "unhosted wallet" described "when a financial institution is not required to conduct transactions from the wallet."

As the notice describes it, the 2020 plan had two thresholds. If the transaction was greater than $10,000, or multiple transactions aggregated to greater than $10,000 in 24 hours, banks and MSBs would have filed a report with FinCEN and verified their customer's identity. If the transaction was greater than $3,000, they would have kept records of the customer's transaction and counterparty, including verifying the identity of their customer.

FinCEN says it is withdrawing the proposal, citing the report of the President's Working Group on Digital Asset Markets, "as part of the Trump Administration's ongoing efforts to ensure digital asset regulations are fit-for-purpose." The notice adds: "FinCEN will take no further action on this NPRM."

The mixing proposal

The second notice, FR Doc. 2026-20429 (91 FR 63513–63514), withdraws both a finding and a proposed rule that FinCEN published at 88 FR 72701 on Oct. 23, 2023, under section 311 of the USA PATRIOT Act. The finding held that international CVC mixing was a class of transactions of primary money laundering concern. The proposal would have imposed "special measure one," a set of recordkeeping and reporting requirements, on covered financial institutions. As the notice describes it, the 2023 proposal defined CVC mixing as activity facilitating CVC transactions "in a manner that obfuscates the source, destination, or amount involved in one or more transactions regardless of the type of protocol or service used."

According to the notice, the 2023 plan would have required institutions to report information on CVC mixing transactions, such as the amount of CVC transferred, the CVC type, the mixer used, customers' wallet addresses, transaction hashes, transaction dates, IP addresses and a narrative description of the activity. Institutions would also have kept records of customers tied to those transactions, including full identity, date of birth, address, email address, or unique identifying numbers.

The notice quotes the July 2025 Working Group report, which said "the Trump Administration supports the ability of lawful users of digital assets to privately transact on a public blockchain." That report recommended Treasury consider next steps on the mixing proposal, according to the notice. FinCEN also writes that it "maintains that illicit actors continue to use mixers and other tools and methods to hinder law enforcement investigations" even as it withdraws the proposal.

FinCEN says the withdrawal "is informed by the concerns from commentors that the expansive definition of CVC mixing in the proposed rule could have a chilling effect on legitimate activity and place a large reporting burden on covered financial institutions." The next sentence reads: "However, FinCEN will continue to monitor activity involving CVC mixers for indicia of money laundering, terrorist financing, or other illicit finance activity, and may take appropriate steps in the future to mitigate any such activity."

Both notices are signed by Jimmy L. Kirby, Deputy Director of FinCEN.

A separate proposal, one day earlier

The withdrawals came a day after a separate FinCEN proposal. In FR Doc. 2026-20371 (91 FR 63208–63226), published Oct. 5, FinCEN found that transactions involving companies operating outside the United States that are controlled by the A7 Network, which the notice describes as "a sanctions evasion and money laundering service with ties to Russia," are a class of transactions of primary money laundering concern. It proposed prohibiting certain transmittals of funds involving those transactions by covered financial institutions. Written comments are due Nov. 4, 2026.

The notice says the network's three Russia-based core companies, A7 LLC and its subsidiaries A71 LLC and A7 Agent LLC, administer it with and through several Russia- and Kyrgyz Republic-based persons, including "businesses and digital asset exchanges subject to sanctions imposed by OFAC and the UK (as well as, in most cases, the EU)," and it lists Garantex and Grinex among them.

Not financial advice.