The U.S. Treasury Department has withdrawn a long-standing proposal that would have required banks and crypto businesses to report certain transfers above $10,000 involving self-custody wallets.

The Financial Crimes Enforcement Network (FinCEN) pulled the 2020 proposal on Oct. 5, according to an announcement on its website. The agency also scrapped a separate 2023 proposal targeting cryptocurrency mixing services. Neither rule ever took effect.

The decision removes years of uncertainty for crypto users who move assets between regulated platforms and wallets they control themselves. It also signals a shift in the U.S. approach to digital asset regulation.

Self-Custody Rules Come to an End

The 2020 proposal would have required financial institutions to collect information on certain transactions involving unhosted wallets — addresses whose private keys are held by users themselves rather than by an exchange or another regulated intermediary. It also called for reporting on transactions exceeding $10,000, including multiple transfers that crossed the threshold within 24 hours. That figure mirrors the threshold banks have long applied when reporting large cash transactions under the Bank Secrecy Act.

The measure drew significant concerns over privacy, compliance costs and the practical difficulty of identifying the owners of self-custody addresses. FinCEN said it reviewed public comments before withdrawing the proposal, describing the move as part of the Trump administration's deregulatory agenda and its effort to develop fit-for-purpose digital asset rules.

Mixer Proposal Also Dropped

FinCEN also abandoned its 2023 proposal concerning convertible virtual currency mixing, which would have imposed additional reporting requirements on certain transactions involving mixers. Mixers can make blockchain transactions harder to trace by combining funds from multiple users. Regulators have linked some services to illicit finance, while privacy advocates argue mixing can also have legitimate uses.

The withdrawal does not eliminate existing anti-money-laundering obligations for banks, exchanges and other covered financial institutions, which must still comply with applicable Bank Secrecy Act requirements.

For the crypto industry, however, the decision removes two proposed regulatory regimes that had remained unresolved for years. CoinDesk reported that both proposals had stayed pending without ever becoming effective. The move could provide greater certainty for businesses supporting self-custody while leaving the broader U.S. crypto compliance framework intact. FinCEN's stated aim of developing fit-for-purpose digital asset rules leaves open the possibility of future proposals, which — like the withdrawn ones — would go through public notice and comment before taking effect.