On 5 October 2026, the US Financial Crimes Enforcement Network (FinCEN) announced two crypto-related withdrawals. These concern proposed requirements for certain wallet transactions and convertible virtual currency (CVC) mixing.1 Both withdrawals took effect on 6 October 2026, when the notices appeared in the Federal Register.2 3
The decision removes two proposed compliance regimes from FinCEN’s rulemaking agenda. It does not remove existing anti-money laundering or sanctions obligations. For banks and crypto businesses, the immediate task is to distinguish abandoned proposals from continuing requirements.
How the Proposals Developed
The first proposal appeared on 23 December 2020. It targeted certain transactions involving unhosted wallets and wallets hosted in specified foreign jurisdictions. Banks and money services businesses would have faced additional reporting, recordkeeping and customer-verification requirements.2
FinCEN announced its separate mixing proposal on 19 October 2023. It sought greater transparency over transactions involving mixing outside the United States.4 The proposal was published in the Federal Register on 23 October 2023.3
After considering public comments, FinCEN announced both withdrawals on 5 October 2026. It described the decision as supporting the administration’s deregulatory agenda and appropriately tailored digital asset regulation.1
What Happened to the Unhosted Wallet Proposal?
The 2020 proposal would have required reporting for covered transactions exceeding US$10,000. It also covered transactions exceeding that amount in aggregate over 24 hours. Separate recordkeeping and customer-verification requirements would have applied to covered transactions exceeding US$3,000.2
FinCEN has now stated that it will take no further action on that proposal.2
Those thresholds must therefore be understood in their historical context. They described proposed obligations under this particular rulemaking. They should not be presented as operative requirements created by it.
What Happened to the Crypto Mixing Proposal?
FinCEN withdrew both its proposed special measure and the underlying finding concerning international CVC mixing. That finding had identified the activity as a class of transactions of primary money laundering concern.3
The withdrawal notice acknowledges concerns about the proposed definition’s breadth. FinCEN recognised potential burdens on financial institutions and a chilling effect on legitimate activity. It nevertheless stated that it would continue monitoring mixers for illicit finance risks.3
For businesses, the withdrawal warrants reviewing policies that relied specifically on the abandoned proposal. It does not establish that every transaction involving a mixer is lawful or acceptable.
Which Crypto Compliance Obligations Remain?
FinCEN’s existing framework continues to determine whether a business’s activities attract Bank Secrecy Act obligations. Its CVC guidance addresses money transmission across different business models. Applicable requirements can include registration, AML programmes, recordkeeping and suspicious activity reporting.5
US sanctions requirements also remain relevant. The Office of Foreign Assets Control (OFAC) explains that sanctions obligations apply equally to digital and traditional currency transactions. Persons within its jurisdiction must avoid unauthorised dealings prohibited by applicable sanctions.6
Accordingly, a withdrawal alone does not justify disabling transaction monitoring or removing sanctions controls. Each control should be assessed against its actual legal basis and documented risk rationale.
What Does This Mean for Cross-Border Crypto Businesses?
International groups should review the withdrawals at entity and jurisdiction level. A US regulatory change does not determine the requirements applicable to an overseas affiliate.
A useful review should separate:
- Controls required by applicable law.
- Controls supporting contractual or banking relationships.
- Controls adopted under the firm’s risk appetite.
- Preparatory measures introduced solely for the withdrawn proposals.
This distinction helps identify unnecessary implementation work while preserving controls with an independent justification. It also prevents outdated regulatory descriptions from reaching customers or counterparties.
What Should Compliance Teams Do Now?
Banks, exchanges and other affected businesses should update their regulatory inventories. The two proceedings should be marked as withdrawn from 6 October 2026.2 3
Policies referencing the proposals should then be reviewed for accuracy. Any resulting operational changes should record their legal basis, risk assessment and approval.
The withdrawals introduce no new implementation deadline. Their immediate value is greater certainty about these proceedings. Businesses can close proposal-specific workstreams after confirming that no continuing obligation depends on them.
Footnotes
- US FinCEN, FinCEN Announces Withdrawals of Proposed Digital Asset Related Rules, 5 October 2026. FinCEN.gov
- US FinCEN, Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets; Withdrawal, 91 FR 63514, 6 October 2026, withdrawing the proposal published at 85 FR 83840, 23 December 2020. federalregister.gov
- US FinCEN, Proposal of Special Measure Regarding Convertible Virtual Currency Mixing, as a Class of Transactions of Primary Money Laundering Concern; Withdrawal, 91 FR 63513, 6 October 2026, withdrawing the finding and proposal published at 88 FR 72701, 23 October 2023. federalregister.gov
- US FinCEN, FinCEN Proposes New Regulation to Enhance Transparency in Convertible Virtual Currency Mixing and Combat Terrorist Financing, 19 October 2023. FinCEN.gov
- US FinCEN, Application of FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual Currencies, FIN-2019-G001, 9 May 2019; US CFTC, US FinCEN and US SEC, Joint Statement on Activities Involving Digital Assets, 11 October 2019. fincen.gov
- US OFAC, FAQ 560: Sanctions Compliance Obligations for Digital Currency Transactions.
