U.S. Treasury Drops Proposed Surveillance Rules for Self-Custody Wallets and Crypto Mixers

The Treasury Department's Financial Crimes Enforcement Network (FinCEN) has formally withdrawn a long-running proposal covering transactions involving unhosted (self-custodial) crypto wallets, along with a separate initiative aimed at international crypto mixing. The withdrawal notices were filed Monday and are slated for publication in the Federal Register on Tuesday. FinCEN cited the White House's July 2025 digital asset report in both actions. In the notice addressing mixers, FinCEN quoted the report's position that the administration supports lawful digital asset users' ability to transact privately on a public blockchain. Unhosted wallets are controlled directly by users rather than by an exchange or bank. FinCEN originally issued the wallet proposal in December 2020, during the final weeks of President Donald Trump's first term. It would have required banks and money services businesses to keep records on customer transactions with such wallets above $3,000 and to file reports for transactions above $10,000, including counterparty information—effectively extending Bank Secrecy Act requirements to personal wallets. FinCEN said it will take no further action on that notice of proposed rulemaking. The second withdrawal eliminates a 2023 proposal, described in the notice as a "Bidenera" proposal, that would have designated international crypto mixing as a class of transactions of "primary money laundering concern" under the USA PATRIOT Act. Mixing services pool and shuffle coins to obscure transaction trails. FinCEN said the proposal would have required financial institutions to report wallet addresses, transaction hashes, and IP addresses linked to suspected mixing activity, and it sought to frame mixers as a national security threat. FinCEN noted that commenters warned its broad definition of mixing could chill legitimate activity. The agency said it will continue monitoring mixers for illicit finance and may consider future steps. Coin Center, a Washington-based crypto policy group that opposed both proposals for years, welcomed the withdrawals. Executive Director Peter Van Valkenburgh called the move positive news in what he described as a difficult month for privacy and the right to use crypto, while cautioning that the underlying statutory authority to pursue similar rules remains. Separately, the Consumer Financial Protection Bureau floated an interpretive rule early last year that would have brought wallets such as MetaMask under consumer payment law, a proposal that drew industry opposition.