FinCEN Withdraws Two Proposed Rules on Crypto Wallets and Mixing

The Financial Crimes Enforcement Network withdrew two proposed rules that would have introduced requirements for certain digital asset transactions, including activity involving unhosted wallets and crypto mixing.

One proposal would have required financial institutions to keep records, verify identities and report certain transactions involving convertible virtual currency (CVC) and unhosted wallets. An unhosted wallet is held outside a financial institution.

The second proposal concerned a special measure related to CVC mixing, a process that combines or routes transactions to obscure their links. FinCEN did not announce replacement rules in its withdrawal notice.

FinCEN decided to withdraw the proposals after considering public comments. The withdrawals were announced Oct. 5.