US Treasury Drops Crypto Wallet Tracking Plan

The US Treasury has withdrawn a controversial proposal that would have imposed new reporting and recordkeeping requirements on transactions involving personal crypto wallets, marking a significant development for cryptocurrency privacy in the United States.

The Financial Crimes Enforcement Network (FinCEN), the Treasury bureau responsible for combating money laundering, confirmed it will take no further action on the crypto wallet proposal introduced in 2020. FinCEN also withdrew a separate 2023 proposal targeting cryptocurrency mixing transactions.

Under the original wallet rule, banks and crypto exchanges would have been required to verify customers and maintain records when transactions involving unhosted wallets exceeded $3,000. Transfers above $10,000, including multiple transactions reaching that threshold within 24 hours, would have required reports to FinCEN.

The proposal never became effective. FinCEN said withdrawing it is part of an effort to ensure US digital asset regulations remain “fit-for-purpose,” pointing to recommendations contained in a July 2025 White House cryptocurrency report.

That report stated that the Trump administration supports the ability of lawful digital asset users to conduct private transactions on public blockchains. The withdrawal becomes effective when published in the Federal Register on October 6.

FinCEN also abandoned its proposed reporting framework for crypto mixers, services designed to obscure the origins and destinations of cryptocurrency transactions. The 2023 plan would have required financial institutions to report suspected mixing transactions involving foreign jurisdictions.

Commenters had warned that FinCEN’s broad definition of crypto mixing could discourage legitimate cryptocurrency activity. However, the agency acknowledged that mixers continue to be used by illicit actors and left open the possibility of taking additional action in the future.

Crypto mixing also remains under legal scrutiny. Tornado Cash developer Roman Storm is scheduled for a retrial in April 2027 over his involvement with the Ethereum-based mixing service.

Despite the withdrawals, existing anti-money-laundering requirements remain intact, including suspicious activity reporting and sanctions screening. Public blockchains such as Bitcoin also continue to provide permanent transaction records that can be analyzed to trace wallet activity.