FinCEN Pulls Unhosted-Wallet and Mixing Proposals, Signaling a Reset in U.S. Crypto Rulemaking

The Financial Crimes Enforcement Network (FinCEN) has withdrawn two proposed cryptocurrency regulations, a move that points to a more deliberate approach to U.S. crypto oversight as agencies revisit earlier ideas after industry feedback. FinCEN said the withdrawals reflect its ongoing rulemaking process and the need to develop regulations that better align with public comments. One proposal targeted transactions involving nonhosted (unhosted) wallets, and the other addressed "cryptomixing." The withdrawn "wallets" proposal could have required financial institutions to report transactions involving a customer's unhosted wallet at or above $10,000. It also would have required recordkeeping for transactions at or above $3,000. Because neither proposal was finalized, pulling them does not reduce current compliance duties. It does, though, remove the risk that these additional reporting and recordkeeping requirements become future obligations for financial institutions. As a result, uncertainty around self-custody regulation eases, while existing Anti-Money Laundering (AML) and sanctions requirements remain in place. CFTC moves toward a broader retail crypto framework As FinCEN steps back from those proposals, the Commodity Futures Trading Commission (CFTC) is advancing work on a wider market structure for crypto. The agency has opened a public comment period for retail crypto transactions under Section 2(C)(2)(D), framing it as an early step toward a national approach to regulating U.S. crypto markets. Rather than focusing on individual products, the CFTC is seeking input on a comprehensive framework that would create a new market category for cryptocurrencies and other digital assets. The agency also signals an intent to curb abusive practices and set baseline compliance requirements. Potential elements under consideration include customer-asset segregation, capital protections, anti-money laundering controls, and proof-of-reserves expectations. The CFTC also said it would treat external wallet deliveries within 28 days as evidence of "actual" delivery. The comment window is 60 days, and the process could give regulated platforms a clearer route to offering crypto market access. What the reset could mean for leveraged crypto trading A central issue is how a CFTC-led framework might reshape access to leveraged crypto markets. Under the proposal, platforms offering margin, leverage, or financing could qualify for a dedicated federal registration pathway, paired with tighter requirements around customer assets, proof of reserves, and market conduct. Registered futures commission merchants could become key intermediaries for covered retail transactions, shifting more compliance responsibility onto platforms that directly handle customer trading and assets. Pure spot markets would remain outside this proposed category, maintaining a separate regulatory track. In practice, the approach could draw a sharper line between standard spot crypto trading and higher-risk leveraged activity, giving regulators more direct oversight where customer exposure is more complex. Final summary FinCEN has withdrawn proposed rules on unhosted-wallet reporting and cryptomixing, reducing uncertainty without changing existing AML and sanctions obligations. The CFTC is soliciting public input on a national framework for retail crypto transactions, including a potential registration path for leveraged trading and possible requirements such as asset segregation and proof of reserves.