FinCEN Drops Crypto Wallet Rule While Maintaining Oversight of Mixers

The U.S. Financial Crimes Enforcement Network (FinCEN) has withdrawn a 2020 proposed rule regarding certain transactions in convertible virtual currency involving unhosted or covered wallets, according to VitalLaw, which specializes in the Bank Secrecy Act.

The agency also canceled a 2023 proposed determination and special measure related to international convertible virtual currency mixing. Both withdrawals were published in the Federal Register on October 6, 2026, taking effect as of the date of publication.

The canceled rule on wallets would have required financial institutions to report transactions exceeding $10,000 and retain records for transactions exceeding $3,000. Unhosted wallets refer to those where the user holds their private keys directly, outside of exchanges. These wallets are typically used for direct peer-to-peer transactions between users outside regulated platforms.

FinCEN stated that it will continue to monitor mixing services. The decision is expected to ease the regulatory burden on fintech companies and virtual asset service providers in the region, at a time when Arab countries are working to establish clear licensing frameworks for this sector.

What Do These Terms Mean?

Unhosted Wallet: A digital wallet in which the owner holds their private keys themselves, rather than through an intermediary platform.

Convertible Virtual Currency: A digital currency that can be exchanged for other currencies or assets, such as Bitcoin and Ethereum.

Mixing Service: A service that blends transactions from multiple users to conceal the source and trail of funds, and is sometimes used in money laundering.

Federal Register: The official journal of the U.S. government in which rules, regulations, and their effective dates are published.