Treasury Wanted a Token Swap or a Fresh Wallet Address Counted as 'Mixing.' It Just Dropped the Rule

For almost three years, a proposed US Treasury rule defined “mixing” broadly enough to cover things most of crypto does every day.

Its examples of “CVC mixing” included:

• “exchanging between types of CVC or other digital assets”
• “creating and using single-use wallets, addresses, or accounts”
• “using programmatic or algorithmic code to coordinate, manage, or manipulate the structure of a transaction”
• “facilitating user-initiated delays in transactional activity”

All of that counted if it was done “in a manner that obfuscates the source, destination, or amount” of a transaction, “regardless of the type of protocol or service used.”

On Monday, Treasury’s Financial Crimes Enforcement Network (FinCEN) withdrew that rule. It also dropped the 2020 “unhosted wallet” rule, which spent nearly six years in limbo.

Both withdrawal notices were signed by FinCEN Deputy Director Jimmy L. Kirby, filed on October 5, and are scheduled for publication in the Federal Register on October 6 (FR Docs 2026-20429 and 2026-20430).

Rule #1: The Mixer Rule (October 2023)

In October 2023, FinCEN proposed naming international crypto mixing a “class of transactions of primary money laundering concern” under Section 311 of the USA PATRIOT Act. That’s one of the heaviest tools Treasury has.

If finalized, banks, exchanges and other covered institutions would have had to file reports whenever they knew, suspected, or had “reason to suspect” a transaction involved mixing in or tied to a jurisdiction outside the US. According to the withdrawal notice, those reports would have included:

• the amount and type of crypto
• the mixer used
• customer wallet addresses
• transaction hashes
• IP addresses
• a written narrative of the activity

Institutions would also have had to keep records of each customer’s “full identity, date of birth, address, email address, or unique identifying numbers.”

The rule also defined a “CVC mixer” as “any person, group, service, code, tool, or function that facilitates CVC mixing.” That covers code and functions, not only companies.

Why FinCEN dropped it

From the notice itself:

“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 also cited the July 2025 report from the President’s Working Group on Digital Asset Markets, quoting its line that “the Trump Administration supports the ability of lawful users of digital assets to privately transact on a public blockchain.” The notice quotes that report’s acknowledgment that “lawful users of digital assets may leverage mixers to enable financial privacy when transacting through public blockchains.”

FinCEN didn’t drop its concerns entirely. The same notice says it “maintains that illicit actors continue to use mixers” and “may take appropriate steps in the future to mitigate any such activity.” The Section 311 authority behind the rule is still on the books. Coin Center’s Peter Van Valkenburgh made the same point, per Decrypt: the legal authority to write similar rules later hasn’t gone anywhere.

Rule #2: The Unhosted Wallet Rule (December 2020)

This one is older and had a rougher start.

FinCEN published it on December 23, 2020, in the final weeks of the first Trump administration, with a 15-day comment window over the holidays. That’s 45 days shorter than the standard 60. People still filed about 7,500 comments, and FinCEN reopened the comment period in January 2021.

Then nothing happened for nearly six years.

Per the withdrawal notice, the rule would have required banks and money services businesses to:

• keep records and verify customer identity for transfers over $3,000 where the counterparty used an unhosted wallet (self-custody) or a wallet at a non-BSA foreign institution in a jurisdiction FinCEN flagged
• file reports with FinCEN on transfers over $10,000, or multiple transfers adding up to more than $10,000 within 24 hours

In practice, sending more than $3,000 from Coinbase to your own Ledger would have created a record with your counterparty’s information attached.

The notice gives just one reason for the withdrawal: it’s part of “the Trump Administration’s ongoing efforts to ensure digital asset regulations are fit-for-purpose.” It ends with: “FinCEN will take no further action on this NPRM.”

What Doesn’t Change

This isn’t an AML amnesty. Existing Bank Secrecy Act obligations stay in force: KYC, AML programs, suspicious activity reports, and OFAC sanctions screening. Exchanges still have to know their customers. What’s gone are the two extra crypto-specific reporting regimes that were never finalized.

It also came on the same day the CFTC proposed two new crypto rules, which tells you how Washington is handling crypto right now: deregulate in some places, write new frameworks in others.

Why This Matters for Crypto Jobs

Privacy tooling just got less risky to build in the US. The mixer rule’s definition covered “code, tool, or function.” Teams building privacy pools, stealth addresses, intent-based swaps, or delayed-settlement designs had a real reason to keep US users away. That specific threat is gone for now, and roadmaps that were stuck on legal review can move again. Expect more hiring for ZK engineers, cryptography researchers, and protocol engineers working on privacy features.

Self-custody products get simpler. Without a $3,000 recordkeeping trigger on transfers to unhosted wallets, exchanges and wallet teams don’t have to build counterparty-ID collection into withdrawals. That’s less compliance overhead and more room for product and wallet engineers to work on UX.

Compliance roles shift instead of shrinking. BSA, SAR and sanctions obligations haven’t moved, and FinCEN says it’s still watching mixers. The work changes from “prepare for a broad new reporting regime” to “use judgment on blockchain analytics risk.” Teams want AML analysts, on-chain investigators, and compliance engineers who can tell legitimate privacy use from laundering without reporting everything. With Section 311 still available, anyone who can read FinCEN notices and translate them into product decisions stays valuable.

Policy people keep winning. These rules sat around for years and ended with a one-line notice. Groups like Coin Center and the companies that commented in 2021 helped shape that result. Policy and government affairs roles keep showing up in crypto hiring for this reason.

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