On October 5, FinCEN announced the withdrawal of two proposed rules that would have imposed requirements on financial institutions for certain convertible virtual currency (CVC) transactions, saying it had considered public comments and was acting as part of the administration’s “deregulatory agenda” and its efforts to ensure that digital asset regulations are “fit-for-purpose.”

The first notice withdraws FinCEN’s 2023 finding under Section 311 of the USA PATRIOT Act that international CVC mixing is a class of transactions of “primary money laundering concern,” along with its proposal to impose the first special measure on that class of transactions (previously covered by InfoBytes here). That proposal, which broadly defined CVC mixing as facilitating CVC transactions in a way that obscures their source, destination or amount, would have required covered financial institutions to report on transactions they know, suspect, or have reason to suspect involve CVC mixing within or involving a foreign jurisdiction, including details such as the amount, the mixer used, customer wallet addresses, transaction hashes and IP addresses, and to keep records of the identities of the customers involved. FinCEN said that although illicit actors continue to use mixers, it was influenced by commenters’ concerns that the proposal’s “expansive definition” of CVC mixing could chill legitimate activity and impose a large reporting burden. FinCEN also cited a July 2025 report by the President’s Working Group on Digital Asset Markets, which said lawful users may use mixers for financial privacy on public blockchains and recommended that the Treasury consider next steps on the proposal. FinCEN said it will continue to monitor CVC mixing activity for signs of illicit finance and may take steps in the future.

FinCEN also withdrew its December 2020 NPRM on transactions involving CVC or digital assets with legal tender status held in unhosted wallets or in wallets at foreign financial institutions that are not subject to the BSA and are located in jurisdictions FinCEN identifies (previously covered by InfoBytes here). That proposal would have required banks and money services businesses to: (i) file reports and verify customer identity for transactions over $10,000, or multiple transactions totaling $10,000 in 24 hours, with counterparties using such wallets; and (ii) keep records and verify customer identity for such transactions over $3,000. FinCEN said it was withdrawing the NPRM as part of efforts, described in the same working group report, to make digital asset regulations “fit-for-purpose,” and that it will take no further action on the proposal. Both withdrawals took effect upon publication in the Federal Register on October 6.