FinCEN has withdrawn its 2023 proposal to impose additional reporting and recordkeeping requirements on certain international cryptocurrency-mixing transactions. The withdrawal took effect on October 6, 2026, and also removes the agency’s finding that international convertible virtual currency mixing is a class of transactions of primary money laundering concern. govinfo.gov

For digital asset businesses, the decision removes a pending compliance framework and acknowledges concerns about legitimate financial privacy. It does not provide blanket legal approval for mixing services or their use.

What Would the Proposal Have Required?

The October 2023 proposal used Section 311 of the USA PATRIOT Act to pursue enhanced reporting and recordkeeping for covered financial institutions. It would have applied when an institution knew, suspected, or had reason to suspect that a transaction involved convertible virtual currency mixing within or involving a jurisdiction outside the United States.

Its definition extended beyond a particular mixer or protocol. It covered activities that obscure a transaction’s source, destination, or amount, including pooling funds, splitting transfers, using single-use wallets, exchanging digital assets, and introducing user-directed delays.

Covered institutions would have reported transaction information—including amounts, wallet addresses, transaction hashes, and relevant IP addresses—and retained identifying information about associated customers. These were proposed requirements, rather than an existing reporting regime now being repealed.

Why Did FinCEN Withdraw It?

FinCEN cited comments warning that the proposal’s expansive definition could discourage legitimate activity and impose substantial reporting burdens on covered institutions.

The notice also references the July 2025 President’s Working Group report, which recognized that lawful digital asset users may use mixers to protect financial privacy on public blockchains. At the same time, FinCEN maintains that illicit actors use these tools to conceal funds and obstruct investigations. The agency says it will continue monitoring mixer-related activity and may take further action against illicit finance.

Our reading is that the withdrawal reflects a reconsideration of this broad reporting approach, while leaving room for future measures targeting specific risks.

What Does This Mean for Compliance?

The withdrawal does not amend the separate rules governing money transmission, anti-money laundering programs, or sanctions.

FinCEN’s existing guidance explains that certain convertible virtual currency businesses qualify as money transmitters and have registration, program, recordkeeping, and reporting responsibilities. Its guidance also distinguishes an anonymizing service provider from a provider that merely supplies anonymizing software. A business’s actual activities remain central to that analysis.

Sanctions obligations also apply to virtual currency transactions. Businesses should continue assessing applicable restrictions and counterparty exposure rather than treating the withdrawal as permission to transact with any service or wallet.

Practical Steps for Founders and Compliance Teams

For businesses that had been preparing for the proposal, this is an opportunity to review their compliance plans:

• Update regulatory trackers. Record the withdrawal and revisit projects built specifically around the proposed reporting framework.

• Review policy language. Check whether internal policies, customer disclosures, or vendor requirements describe the proposal as binding law.

• Evaluate controls individually. Before removing a control, determine whether it supports another legal obligation, a contractual requirement, or the business’s own risk management.

• Reassess the business model. For privacy-focused products, examine who accepts, controls, and transmits funds, alongside the technology’s design.

These are practical recommendations arising from the withdrawal, rather than new requirements imposed by the notice.

Learn more

This blog post is for informational purposes only and is not legal advice. Please consult with a Launch Legal attorney regarding your specific situation.