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The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) has withdrawn a proposed rule that would have required U.S. financial institutions to report cryptocurrency transactions they “know, suspect, or have reason to suspect” involved mixing in a foreign jurisdiction. The proposal, first published in October 2023, was pulled this week after industry pushback and concerns about privacy and compliance burdens, FinCEN said in its withdrawal announcement.
FinCEN framed the decision as responsive to public comment. As the agency put it, “While FinCEN maintains that illicit actors continue to use mixers and other tools and methods to hinder law enforcement investigations, this withdrawal is informed by the concerns from commenters that the expansive definition of [Convertible Virtual Currency] mixing in the proposed rule could have a chilling effect on legitimate activity and place a large reporting burden on covered financial institutions.”
What the rule would have required and why it worried industry
The October 2023 proposal sought to broaden reporting obligations in an effort to curb money laundering and other criminal uses of crypto “mixers” or “tumblers.” Critics — including industry groups and major exchanges — warned the rule’s language was too expansive and risked sweeping in routine, lawful transactions. The Blockchain Association argued there is “nothing inherently suspicious about desiring the same degree of privacy available for traditional financial transactions,” and warned the rule could push activity offshore. Coinbase predicted the rule would lead to “bulk reporting of non-suspicious transactions,” and several other exchanges said it could discourage good cybersecurity practices.
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The White House weighed in as well. A July 2025 report cited by FinCEN argued that excessive reporting requirements could harm the competitiveness of U.S. crypto businesses and noted that “lawful users of digital assets may leverage mixers to enable financial privacy when transacting through public blockchains.” The report was also cited by critics who point to President Donald Trump and his family’s investments in cryptocurrency and argue there is a potential conflict of interest.
Background: mixers, previous policy actions and legal challenges
Most cryptocurrency activity is recorded on public ledgers known as blockchains. Mixers pool and shuffle funds from multiple users so that onlookers cannot easily link senders with recipients. In its 2019 guidance, FinCEN warned that virtual-currency services cannot evade oversight by offering anonymity-enhanced services, stating directly that “a money transmitter cannot avoid its regulatory obligations because it chooses to provide money transmission services using anonymity-enhanced CVC.”
The Treasury has taken enforcement actions against mixers in the past. The agency’s Office of Foreign Assets Control (OFAC) sanctioned two mixers in 2022, alleging they helped launder proceeds stolen by North Korean hackers. A federal court later overturned the sanctions against one of those services, Tornado Cash, in 2024.
Administrations have applied financial surveillance authorities broadly. The USA PATRIOT Act of 2001 gives the Treasury authority to require reporting by banks and other institutions for national-security reasons; the source material reporting on this history notes that those surveillance powers have been extended into a range of domestic and international financial oversight actions, and that prior administrations pursued measures such as predictive intelligence units that analyzed financial activity.
What comes next
Although FinCEN withdrew the October 2023 proposal, the agency signaled it remains concerned about illicit uses of mixers and may return with other measures. In the withdrawal announcement, FinCEN said it will keep monitoring crypto-mixer activity for “indicia of money laundering, terrorist financing, or other illicit finance activity” and “may take appropriate steps in the future to mitigate any such activity.”
The decision leaves open a continuing policy debate: balancing law enforcement goals against privacy and competitive concerns for lawful crypto users and businesses. FinCEN’s withdrawal reflects the current administration’s responsiveness to those concerns, while its stated intent to keep monitoring suggests regulators will continue to seek tools to address illicit finance in the cryptocurrency ecosystem.
