U.S. Treasury Scraps 2020 Rules Targeting "Unhosted" Crypto Wallet Transfers and Mixing

The U.S. Treasury Department has formally withdrawn a 2020 rule proposal that would have expanded reporting and recordkeeping requirements for transactions involving personal cryptocurrency wallets. The Financial Crimes Enforcement Network (FinCEN), the department's anti-money-laundering bureau, said it will take no further action on the initiative. FinCEN also pulled a separate proposal the same day aimed at crypto mixing. Both withdrawals become effective upon publication in the Federal Register on October 6. So-called personal, or "unhosted," wallets are apps or devices that allow users to hold their own digital assets rather than keeping them with a bank or exchange. The 2020 proposal would have required banks and exchanges to verify customers and retain records for transfers involving unhosted wallets above $3,000. Transactions over $10,000—or multiple transfers totaling $10,000 within 24 hours—would have triggered a report to FinCEN. The rule was proposed but never implemented. In its filing, FinCEN said the withdrawal is intended to keep digital-asset regulations "fit-for-purpose," citing a July 2025 White House crypto report. An excerpt included in FinCEN's document says the Trump administration supports lawful digital-asset users' ability to transact privately on a public blockchain. FinCEN's separate withdrawal covers a 2023 proposal focused on crypto mixing, a practice that blends funds from many users to obscure their origin. That proposal would have required firms to report suspected mixing activity with a foreign link. Treasury's regulatory agenda had continued to list the rule for final action in December 2027. FinCEN said commenters warned that the proposed definition of mixing could chill legitimate activity. The bureau added that illicit actors continue to use mixers and that it may take action in the future. Prosecutors are also pursuing mixer-related cases: developer Roman Storm is scheduled for a Tornado Cash retrial in April 2027 tied to the Ethereum-based mixing service. FinCEN noted that existing obligations—including suspicious activity reporting and sanctions screening—remain in force. It also emphasized that every Bitcoin transaction is still recorded on a public ledger, allowing wallet-to-wallet payments to be traced.