U.S. Treasury Withdraws Proposed Surveillance Rules Targeting Crypto Wallets and Mixers
Highlights
- The U.S. Treasury has withdrawn two proposed reporting rules for unhosted wallets and crypto mixers.
- The rule for the wallets would have required them to report certain transactions above $3,000 and $10,000.
- Crypto mixers would have been required to report transactions outside the U.S.
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has dropped two proposed surveillance rules that would have expanded the reporting requirements for unhosted wallets and crypto mixers. The agency said this was part of the Trump administration’s efforts to ensure crypto regulations are fit for purpose.
Treasury Withdraws Two Proposed Crypto Rules
In two separate releases, FinCEN announced that it is withdrawing its proposed rules for unhosted wallets and crypto mixers. In the notice announcing the withdrawal of the proposed rule for unhosted wallets, the agency noted that it was taking this action as part of the “Trump Administration’s ongoing efforts to ensure digital asset regulations are fit-for-purpose.”
The proposed rule would have required banks and other financial institutions to report certain transactions worth more than $3,000 and $10,000 involving crypto assets that customers hold in unhosted wallets. The Treasury had proposed this rule as far back as 2020.
Meanwhile, the agency also released another notice announcing that it is withdrawing the proposed rule targeting crypto mixers. The proposed rule would have required financial institutions to report transactions involving foreign crypto mixers.
The Treasury signaled that it made this move to align with the Trump administration’s stance on fit-for-purpose crypto regulations. It also said concerns from commentators informed this decision.
“… this 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,” FinCEN said. However, the agency vowed to keep monitoring activities involving these crypto mixers for any indication of money laundering and other illicit activities.
Commenting on the withdrawal of these proposed rules, Coin Center, which had actively opposed these rules, described it as a “major win” for financial privacy. Notably, the withdrawal comes as the privacy narrative heats up, with crypto assets such as ZEC enjoying momentum.
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