The US anti-money laundering agency FinCEN is withdrawing its crypto mixing rule and also scrapping its unhosted wallet proposal. Neither the 2020 nor the 2023 draft ever took effect, so obligations for banks and crypto service providers stay unchanged.
The Financial Crimes Enforcement Network (FinCEN) is the US Treasury Department's anti-money laundering agency. It enforces the Bank Secrecy Act. Under Section 311, it can also designate jurisdictions, institutions or whole transaction classes as a primary money laundering concern. It may then order special measures. Mixers pool many users' crypto transactions to obscure the payment trail. Unhosted wallets are self-custody wallets that users control without an exchange or custodian. FinCEN presented the wallet proposal in December 2020, in the last weeks of Trump's first administration. Later, under President Biden, a draft special measure followed in October 2023. It would have treated crypto mixing as a separate transaction class. In early October 2026, the agency announced the withdrawal of both drafts. Publication in the Federal Register followed a day later. The wallet draft would have required financial institutions to record counterparty data from USD 3,000.
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FinCEN buries the 2023 crypto mixing rule
The October 2023 draft relied on Section 311 and declared crypto mixing a transaction class of primary money laundering concern. As a result, institutions would have had to report transactions involving crypto mixing with a link to a foreign jurisdiction. Those reports would have covered wallet addresses, transaction hashes and IP addresses. Through the IP addresses, FinCEN would thus have received users' connection data, not just details of the payment itself.
In its press release, FinCEN justifies the withdrawal with the Trump administration's deregulatory agenda. It also cites the goal of tailoring digital asset rules appropriately. In addition, the withdrawal notice in the Federal Register lists objections to the draft itself. Commenters had warned that the broad definition of mixing could have a chilling effect on legitimate activity. Another factor was the heavy reporting burden on institutions. The definition was "extraordinarily broad," according to Coin Center, an advocacy group that had long opposed both proposals. In its view, the wording captured common techniques that ordinary users rely on to protect their privacy. The stated reasons therefore concern the scope and cost of the rule, not the money laundering risk posed by mixers. Indeed, FinCEN still assumes that illicit actors use mixers to hamper investigations.
Unhosted wallet proposal falls after almost six years
The December 2020 wallet draft targeted banks and money services businesses, a category that includes money transmitters and currency exchangers. Besides data collection from USD 3,000, the text provided for a reporting requirement for transactions above USD 10,000. The rule would have created "a double standard for crypto transactions," Coin Center argued. With the withdrawal, the existing framework stays in place. Anti-money laundering obligations under the Bank Secrecy Act continue to apply unchanged. Likewise, the sanctions of the Office of Foreign Assets Control (OFAC) remain in force.
The sequence of steps since 2025 is striking. It began in March 2025, when OFAC removed the mixer Tornado Cash from its sanctions list. At the end of July 2025, a presidential working group on digital asset markets released its report. Both withdrawals now rely on that report. In a report to Congress in March 2026, the Treasury Department recommended no new restrictions on non-custodial mixers. At the same time, the department chose not to finalize the 2023 mixing draft. Consequently, the current withdrawal makes that decision formal.
Self-hosted wallets in the EU and Switzerland stay on a leash
In the EU, the Transfer of Funds Regulation (EU) 2023/1113, or TFR, has applied since late December 2024. It applies the Travel Rule to crypto transfers without a de minimis threshold. The regulation therefore departs from the FATF standard of USD 1,000 or EUR 1,000. Moreover, transfers above EUR 1,000 to or from a self-hosted address carry an extra duty. The crypto-asset service provider (CASP) must check whether the address belongs to the customer. Doing so requires at least one reliable, independent method, such as a signed message or a Satoshi test. Guidelines from the European Banking Authority (EBA) have likewise applied since late 2024. Under them, a mere self-declaration by the customer is not enough. Pure P2P transfers without a service provider, however, remain outside the regulation.
Switzerland has taken a tighter line since August 2019, when the Swiss Financial Market Supervisory Authority FINMA issued supervisory guidance. Supervised institutions may only send tokens to, and receive them from, external wallets of their own, already identified customers. They must prove technically that the customer controls the wallet, for example with a Satoshi test. The bar is higher for third-party wallets. In that case, the institution must identify the third party, establish the beneficial owner and verify that party's control. The legal basis is Article 10 of the FINMA Anti-Money Laundering Ordinance (AMLO-FINMA). This provision sets no threshold for originator and beneficiary information. In addition, FINMA applies the requirements to unregulated wallets without exception. The authority thus called the Swiss implementation one of the strictest in the world.
The comparison shows the gap with the US. Washington has dropped the proposal that would have covered self-hosted counterparties from USD 3,000. As a result, no dedicated recording requirement for such transfers is coming for now. In contrast, the EU requires proof of ownership from EUR 1,000, and Switzerland regardless of amount. FATF Recommendation 16, the international Travel Rule, applies only to VASPs and financial institutions, not to pure P2P transfers. Switzerland accordingly sets the tightest limits on self-hosted wallets among the three jurisdictions. On anonymity-enhancing coins, though, the EU has adopted an explicit ban. The Anti-Money Laundering Regulation (AMLR) (EU) 2024/1624 sets out this ban. From July 2027, it prohibits banks, financial institutions and CASPs from maintaining anonymous accounts and accounts with such coins. Private individuals may nevertheless hold privacy coins such as Monero or Zcash in self-custody after that date.
Treasury keeps tools for future intervention
The withdrawal is not an all-clear, though. FinCEN plans to keep monitoring mixer activity and reserves the right to take future action. Coin Center nevertheless sees the formal withdrawal as closing the door on both drafts. The March report on the GENIUS Act already outlines new instruments. In it, the department recommends that Congress adopt a dedicated "hold law" for digital assets. This refers to liability protection for temporarily freezing suspicious funds. According to the report, such a law would be especially useful against illicit flows involving permitted payment stablecoins.
Unlike the withdrawn drafts, a hold law targets individual cases rather than blanket reporting requirements. So far, however, it is only a recommendation to Congress. Furthermore, the report proposes a sixth Section 311 special measure and seeks to clarify which DeFi actors bear AML obligations. For Swiss institutions and European CASPs, the decision in Washington changes nothing. After all, their obligations regarding self-hosted wallets stem from AMLO-FINMA and the TFR.
