The Financial Crimes Enforcement Network, FinCEN, formally withdrew two proposals that would expand monitoring obligations for cryptocurrency transactions in the United States. The measures affected transactions involving non-custodial wallets and mixing services.
One of the proposals, introduced in 2020, would require banks and money services businesses to collect information, keep records and verify customers in certain transfers involving unhosted wallets, also known as self-custody wallets.
The text provided for reporting to FinCEN of transactions above US$ 10,000, including aggregated transactions over 24 hours. For amounts above US$ 3,000, records and customer identity verification would also be required. The agency said it does not intend to move forward with the proposal.
The second withdrawal involves a 2023 initiative that would classify the international mixing of cryptocurrencies as a category of transactions of primary concern for money laundering.
The measure would allow additional recordkeeping and reporting obligations to be imposed on financial institutions, including information on transferred assets, wallet addresses, transaction hashes and identification of the customers involved.
Withdrawal does not end oversight of mixers
In the case of mixers, FinCEN cited criticism received during the public consultation that the proposed definition was too broad and could affect legitimate activities, in addition to creating a high compliance burden.
The agency stressed, however, that criminals continue to use mixers and other tools to hinder the tracing of funds. FinCEN said it will continue monitoring these activities and may adopt new measures in the future.
The decision, therefore, does not mean the clearance of mixers or the end of anti-money laundering rules. It ends only these two specific regulatory instruments.
FinCEN also linked the change to the US government's policy of reducing requirements considered excessive and adopting a regulatory approach for digital assets that is more proportional to risks.
