FinCEN drops crypto mixer proposal over privacy concerns

On Oct. 5, 2026, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) withdrew its 2023 proposal to treat international crypto mixing as a money-laundering concern, citing risks to lawful use and financial institutions, according to The Block’s report.

• October 2023: FinCEN proposed the mixing measure under Section 311 of the USA PATRIOT Act.
• Oct. 5, 2026: FinCEN announced the withdrawal; the notice was scheduled for Federal Register publication on Oct. 6.
• Also withdrawn: A separate proposal from 2020 covering transactions involving self-hosted wallets.

What would the crypto mixing proposal have required?

The proposal would have required banks and other covered financial institutions to report certain transactions involving crypto mixing. FinCEN described mixing as methods that obscure a transaction’s source, destination or amount, such as pooling funds, splitting transactions, or delaying withdrawals.

Reports could have included wallet addresses, transaction hashes and IP addresses, The Block reported. A wallet address identifies where crypto is sent or held; a transaction hash is a code used to identify a transfer on a blockchain. The proposal focused on international convertible virtual currency mixing and paired reporting requirements with a finding that it was a class of transactions of primary money-laundering concern.

Why did FinCEN withdraw the proposal?

FinCEN said commenters warned that the proposal’s broad definition could chill legitimate activity and create a large reporting burden for covered financial institutions. The agency cited a 2025 report from the President’s Working Group on Digital Asset Markets, which said lawful users may use mixers to protect financial privacy when transacting on public blockchains.

The withdrawal does not mean FinCEN considers all mixing lawful or harmless. The agency said it still believes illicit actors use mixers to hinder law-enforcement investigations, and it will continue to monitor activity for signs of illicit finance. The withdrawal notice is listed on FinCEN’s announcement of the rule withdrawals.

What changes for crypto users and financial firms?

The proposal was never finalized, so withdrawing it does not change financial institutions’ existing obligations, The Block reported. It ends this rulemaking and the proposed special measure; it does not remove the reporting duties already in force under other rules.

FinCEN also withdrew a separate December 2020 proposal that would have required banks and money services businesses to verify identities and keep records for some transactions involving self-hosted wallets. Those are wallets controlled directly by users rather than a financial service. The mixing withdrawal leaves open the possibility of future action: FinCEN said it may take steps later to address illicit activity involving crypto mixers.

Sources and documents

• The Block’s report — theblock.co
• FinCEN’s announcement of the rule withdrawals — fincen.gov