{"id":14152,"date":"2026-10-06T19:06:47","date_gmt":"2026-10-06T19:06:47","guid":{"rendered":"https:\/\/cryptonews.uk.com\/?p=14152"},"modified":"2026-10-06T19:06:47","modified_gmt":"2026-10-06T19:06:47","slug":"fincen-drops-crypto-mixing-proposal-as-backlash-kills-rule","status":"publish","type":"post","link":"https:\/\/cryptonews.uk.com\/?p=14152","title":{"rendered":"FinCEN drops crypto mixing proposal as backlash kills rule"},"content":{"rendered":"<p><\/p>\n<div data-cs-editorial-figure-scope=\"\" data-cs-editorial-quote-scope=\"\" data-cs-image-viewer-scope=\"\" data-single-article-content=\"\">\n<p>US Treasury\u2019s Financial Crimes Enforcement Network (FinCEN) announced on Oct. 5 that it is withdrawing a reporting proposal for crypto mixing, the use of techniques that obscure a transaction\u2019s source, destination, or amount.<\/p>\n<p>The plan reached beyond dedicated mixing services and would have required financial institutions to report information about covered transactions and their customers.<\/p>\n<p>The agency is withdrawing both its 2023 finding that international crypto mixing is a class of transactions of primary money laundering concern and the proposed recordkeeping and reporting rule.<\/p>\n<p>The withdrawal notice lists Oct. 6 as its scheduled Federal Register publication date and states that withdrawal will take effect upon publication. FinCEN cited commenters\u2019 concerns that the expansive definition could chill legitimate activity and impose a large reporting burden.<\/p>\n<p>The proposed definition applied regardless of the protocol or service used. Examples included pooling funds, coordinating transactions with code, splitting transfers, routing funds through a series of single-use wallets, exchanging between crypto assets, and introducing user-initiated delays.<\/p>\n<p>The proposed obligation applied when a covered domestic financial institution knew, suspected or had reason to suspect that a crypto transaction by, through or to it involved mixing within or involving a jurisdiction outside the US.<\/p>\n<figure id=\"attachment_569496\" aria-describedby=\"caption-attachment-569496\" style=\"width: 720px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" loading=\"lazy\" decoding=\"async\" class=\"shoggoth-infographic shoggoth-infographic-portrait wp-image-569496\" src=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2026\/10\/exec-e820c640-b8ea-41c3-9cf5-03adfc8963bb.png\" alt=\"Comparison of FinCEN's abandoned crypto-mixing reporting proposal with continuing compliance duties, including the conditional foreign-nexus trigger and the distinction between software supply and money transmission.\" width=\"720\" height=\"900\" srcset=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2026\/10\/exec-e820c640-b8ea-41c3-9cf5-03adfc8963bb.png 1122w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2026\/10\/exec-e820c640-b8ea-41c3-9cf5-03adfc8963bb-240x300.png 240w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2026\/10\/exec-e820c640-b8ea-41c3-9cf5-03adfc8963bb-819x1024.png 819w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2026\/10\/exec-e820c640-b8ea-41c3-9cf5-03adfc8963bb-768x960.png 768w\" sizes=\"auto, (max-width: 720px) 100vw, 720px\"\/><img loading=\"lazy\" loading=\"lazy\" decoding=\"async\" class=\"lazyload shoggoth-infographic shoggoth-infographic-portrait wp-image-569496\" src=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2026\/10\/exec-e820c640-b8ea-41c3-9cf5-03adfc8963bb.png\" alt=\"Comparison of FinCEN's abandoned crypto-mixing reporting proposal with continuing compliance duties, including the conditional foreign-nexus trigger and the distinction between software supply and money transmission.\" width=\"720\" height=\"900\" srcset=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2026\/10\/exec-e820c640-b8ea-41c3-9cf5-03adfc8963bb.png 1122w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2026\/10\/exec-e820c640-b8ea-41c3-9cf5-03adfc8963bb-240x300.png 240w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2026\/10\/exec-e820c640-b8ea-41c3-9cf5-03adfc8963bb-819x1024.png 819w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2026\/10\/exec-e820c640-b8ea-41c3-9cf5-03adfc8963bb-768x960.png 768w\" data-sizes=\"(max-width: 720px) 100vw, 720px\"\/><figcaption id=\"caption-attachment-569496\" class=\"wp-caption-text\">FinCEN dropped an unimplemented crypto-mixing reporting plan, while existing transmitter, transfer, and suspicious-activity rules remain.<\/figcaption><\/figure>\n<p>The definition also excluded certain internal processes used to execute transactions at banks, broker-dealers and money services businesses, provided they retained source and destination records and supplied them when legally required.<\/p>\n<aside id=\"cs-inline-newsletter-1\" class=\"cs-inline-newsletter\" data-inline-newsletter=\"\" data-newsletter-placement=\"article-midpoint\" data-newsletter-pending-label=\"Joining\u2026\" data-newsletter-pending-status=\"Joining The Catalyst\u2026\" data-newsletter-email-required-message=\"Before sending, please provide your email address.\" aria-labelledby=\"cs-inline-newsletter-1-title\" aria-describedby=\"cs-inline-newsletter-1-copy\">\n<div class=\"cs-inline-newsletter__inner\">\n<div class=\"cs-inline-newsletter__content\"> <span class=\"cs-inline-newsletter__eyebrow\"> <i class=\"fa-regular fa-envelope\" aria-hidden=\"true\"\/> The Catalyst <\/span><\/p>\n<h2 id=\"cs-inline-newsletter-1-title\" class=\"cs-inline-newsletter__title\">What\u2019s moving crypto. Why it matters.<\/h2>\n<p id=\"cs-inline-newsletter-1-copy\" class=\"cs-inline-newsletter__copy\">Get CryptoSlate\u2019s essential stories and what to watch next.<\/p>\n<p>  <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"16\" height=\"16\" fill=\"currentColor\" viewbox=\"0 0 16 16\" aria-hidden=\"true\" focusable=\"false\"> <path d=\"M15 3.604H1v1.891h14v-1.89ZM1 7.208V16l7-3.926L15 16V7.208zM15 0H1v1.89h14z\"\/> <\/svg> <span>Published on Substack<\/span> <\/div>\n<div class=\"cs-inline-newsletter__form-shell\">\n<p id=\"cs-inline-newsletter-1-privacy\" class=\"cs-inline-newsletter__privacy\">Seven days a week. Unsubscribe anytime.<\/p>\n<p> <i class=\"fa-regular fa-circle-xmark\" aria-hidden=\"true\"\/> <span>Whoops, looks like there was a problem. Please try again.<\/span><\/p>\n<div class=\"cs-inline-newsletter__success\" role=\"status\" aria-live=\"polite\" aria-atomic=\"true\" tabindex=\"-1\"> <span class=\"cs-inline-newsletter__success-icon\" aria-hidden=\"true\"\/><\/p>\n<div>\n<h3 class=\"cs-inline-newsletter__success-title\">Check your inbox.<\/h3>\n<p class=\"cs-inline-newsletter__success-copy\">Your signup request was sent. If confirmation is required, follow the email from Substack.<\/p>\n<p class=\"cs-inline-newsletter__success-hint\">Look in spam or promotions if you don\u2019t see it.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/aside>\n<p>For wallet users, the proposed privacy exposure came through institutions\u2019 reports. These would have included wallet addresses, transaction hashes, IP addresses, and customer identity information in the institution\u2019s possession. Institutions would also have had to document compliance.<\/p>\n<div class=\"cs-article-embed\">\n<p> <span class=\"cs-article-embed__related-reading\">Related Reading<\/span><\/p>\n<h3 class=\"cs-article-embed__title\">Zcash and privacy protocols face a \u201cdo-or-die\u201d SEC meeting that determines if developers are personally liable for code<\/h3>\n<\/p>\n<p> <span class=\"cs-article-embed__arrow\" aria-hidden=\"true\"> <i class=\"fa-light fa-arrow-up-right\"\/> <\/span> <\/div>\n<h2>Compliance checks remain<\/h2>\n<p>Under FinCEN\u2019s existing guidance, covered crypto money transmitters remain subject to registration, risk-based anti-money-laundering programs, applicable customer checks, recordkeeping and suspicious activity reporting. Qualifying transfers also remain subject to the Funds Travel Rule.<\/p>\n<p>The guidance distinguishes an anonymizing service that accepts and retransmits value from a supplier of anonymizing software. Supplying a tool alone does not make someone a money transmitter, although operating a transmission business can.<\/p>\n<p>An unhosted-wallet user paying for goods or services on their own behalf is not a money transmitter on that basis.<\/p>\n<p>FinCEN\u2019s announcement also covers the separate unhosted-wallet proposal published in December 2020. That proposal was already listed as withdrawn on April 12, 2024, in the Spring 2024 regulatory agenda. The new notice says the agency will take no further action.<\/p>\n<p>FinCEN says it will continue monitoring crypto mixing for money laundering, terrorist financing, and other illicit activity, and may take further steps. Financial institutions\u2019 existing obligations remain relevant when assessing privacy-related transactions.<\/p>\n<\/div>\n<p>Featured,Legal,Privacy,Regulation,regulationPrivacy,regulation#FinCEN #drops #crypto #mixing #proposal #backlash #kills #rule1791313607<\/p>\n","protected":false},"excerpt":{"rendered":"<p>US Treasury\u2019s Financial Crimes Enforcement Network (FinCEN) announced on Oct. 5 that it is withdrawing a reporting proposal for crypto mixing, the use of techniques that obscure a transaction\u2019s source, destination, or amount. The plan reached beyond dedicated mixing services and would have required financial institutions to report information about covered transactions and their customers.<\/p>\n","protected":false},"author":1,"featured_media":14153,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[1214,62,102,7286,3409,7287,134,1008,389,452],"class_list":["post-14152","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ethereum","tag-backlash","tag-crypto","tag-drops","tag-fincen","tag-kills","tag-mixing","tag-privacy","tag-proposal","tag-regulation","tag-rule"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.6 (Yoast SEO v26.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>FinCEN drops crypto mixing proposal as backlash kills rule - Crypto News: Latest Cryptocurrency News and Analysis<\/title>\n<meta name=\"description\" content=\"FinCEN is withdrawing a broad crypto-mixing reporting proposal. 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