The U.S. Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury that administers the Bank Secrecy Act, has formally withdrawn a 2020 proposal that would have imposed recordkeeping, reporting, and identity-verification requirements on certain cryptocurrency transactions involving unhosted wallets — self-custodied wallets whose holders control their own private keys rather than relying on an exchange or other custodian — shifting the oversight landscape and ending a rulemaking that had remained unresolved for nearly six years.

In a Federal Register notice scheduled for publication on October 6, the bureau confirmed it will take no further action on the rule, which it first proposed on December 23, 2020. The withdrawal was also announced in a news release published by the agency.

What the 2020 Proposal Would Have Required

The original proposal covered certain transactions involving convertible virtual currency or digital assets with legal tender status. Under the plan, banks and money services businesses (MSBs) would have faced additional obligations when customers transacted with certain wallets, including unhosted wallets and some wallets hosted by financial institutions in jurisdictions identified by FinCEN.

For transactions exceeding $10,000, banks and MSBs would have been required to file reports containing information about customers and counterparties. Multiple transactions exceeding $10,000 in aggregate within 24 hours would also have fallen under the proposed reporting requirement.

Transactions above $3,000 would have required institutions to maintain records about customers, transactions, and counterparties. In those circumstances, banks and MSBs would also have needed to verify their customers' identities.

Withdrawal Cites Administration Digital Asset Policy

According to FinCEN, the withdrawal forms part of the Trump administration's approach to digital asset regulation. Officials pointed to a report from the President's Working Group on Digital Asset Markets, established under Executive Order 14178, which was signed in January 2025. FinCEN said the decision supports efforts to make digital asset regulations "fit-for-purpose."

Alongside the unhosted wallet proposal, FinCEN also withdrew a separate proposed rule concerning cryptocurrency mixing transactions. That proposal sought to classify certain convertible virtual currency mixing as transactions of primary money laundering concern, and the department had proposed imposing a special measure under its regulatory authority — a power available under Section 311 of the USA PATRIOT Act — as part of the action. Both withdrawals followed consideration of public comments received during the respective rule processes.

Proposed Thresholds Will Not Take Effect

Dropping the 2020 proposal means its planned $3,000 recordkeeping threshold will not take effect, and its proposed reporting requirements for covered transactions exceeding $10,000 will not move forward. The two thresholds formed the core of the proposed compliance regime for covered wallet transactions.

The withdrawal, however, concerns these proposed requirements only. It does not eliminate existing Bank Secrecy Act obligations that may apply to regulated financial institutions, so banks and MSBs continue to operate under the compliance duties already in force. For unhosted wallet users, the decision closes a regulatory proposal that had been pending since December 2020, bringing the long-running rulemaking formally to a close.