Two of the crypto industry's most contentious financial surveillance proposals are officially dead. The U.S. Treasury Department's Financial Crimes Enforcement Network, or FinCEN, has withdrawn its long-pending "unhosted wallet" rule and a separate proposal targeting cryptocurrency mixers, according to notices filed Monday and set for publication in the Federal Register on Tuesday.

The withdrawals close out two rulemakings that, had they been finalized, would have imposed new recordkeeping and reporting requirements on banks and money services businesses handling crypto transactions — obligations that would have directly affected users of self-custodial wallets.

The first notice kills the agency's December 2020 proposal, unveiled in the final weeks of President Donald Trump's first term. The second scraps a 2023 Biden-era rulemaking that would have designated international crypto mixing a class of transactions of "primary money laundering concern" under the USA PATRIOT Act. Together, the two notices unwind measures introduced under different administrations.

The 'Unhosted Wallet' Rule

Unhosted wallets, also called self-custodial wallets, are controlled directly by their users rather than by an exchange or bank. FinCEN's 2020 proposal would have required banks and money services businesses to keep records on customers' transactions with such wallets above $3,000 and to report transactions topping $10,000, including counterparty information. As Decrypt reported at the time, the plan effectively extended Bank Secrecy Act rules to personal wallets.

Because the measure stalled at the proposal stage, those obligations never took effect — and with the withdrawal, they formally won't.

"FinCEN will take no further action on this NPRM," the agency wrote, using the shorthand for a notice of proposed rulemaking.

The Mixer Proposal

The second notice withdraws a 2023 proposal that sought to brand mixers a national security threat. Mixing services pool and shuffle coins to obscure their trail. Under the rule, financial institutions would have been required to report wallet addresses, transaction hashes, and IP addresses tied to suspected mixing, according to the notice.

FinCEN said commenters had warned that the rule's expansive definition of mixing could chill legitimate activity. The agency added that it will keep monitoring mixers for illicit finance and may take steps in the future — leaving the door open to renewed action even as this proposal is shelved.

Both cite the White House's July 2025 digital asset report. The mixer notice quotes the report's statement that the administration "supports the ability of lawful users of digital assets to privately transact on a public blockchain." The citations anchor the reversals to the current administration's stated digital asset policy.

Industry Response

Coin Center, the Washington crypto policy group that vehemently opposed both proposals over the last several years, celebrated the news. "It's been a hard month for privacy and your right to use crypto. There's a bright spot," Executive Director Peter Van Valkenburgh wrote on X.

It's been a hard month for privacy and your right to use crypto. There's a bright spot. Two rules at Treasury that Coin Center has vehemently opposed over the last several years have been officially withdrawn. The "unhosted wallet rule" that would have made Coinbase and…

— Peter Van Valkenburgh (@valkenburgh) October 5, 2026

He cautioned, though, that "the underlying statutory authority to create new, similar bad rules remains" — a reminder that the withdrawals undo specific proposals, not the legal basis for potential successors.

Other Self-Custody Battles

The withdrawal is not the only regulatory fight over self-custody. Early last year, the Consumer Financial Protection Bureau floated an interpretive rule that would have brought wallets like MetaMask under consumer payment law, drawing pushback from industry stakeholders — evidence that the self-custody debate extends well beyond FinCEN.