- FinCEN withdrew its 2020 proposal requiring reports on certain crypto transactions involving unhosted wallets above $10,000.
- The proposal also required banks and MSBs to keep records for transactions exceeding $3,000 involving covered wallets.
- FinCEN also withdrew a separate proposal targeting crypto mixing as part of a broader deregulatory approach.
The U.S. Treasury has withdrawn a proposed rule targeting certain crypto transactions involving unhosted wallets. FinCEN said it will take no further action on the 2020 proposal, which sought reporting, recordkeeping and identity checks for banks and money services businesses. The withdrawal follows public comments and the administration’s effort to make digital asset rules fit for purpose.
FinCEN Withdraws 2020 Wallet Reporting Proposal
FinCEN published the original notice on Dec. 23, 2020. The proposal covered convertible virtual currency and digital assets with legal tender status held in unhosted wallets. It also covered wallets hosted by financial institutions outside the Bank Secrecy Act framework.
FinCEN could identify such foreign jurisdictions under the proposed definition. Under the rule, banks and MSBs would report certain transactions involving covered wallets when amounts exceeded $10,000.
The threshold also applied when multiple transactions exceeded $10,000 within 24 hours. The reports would include information about the customer’s transaction and counterparty. Banks and MSBs would also have to verify the customer’s identity.
Records Would Have Covered $3,000 Transactions
The proposal set a lower threshold for recordkeeping. Banks and MSBs would keep records for transactions exceeding $3,000 involving an unhosted or covered wallet. Those records would include information about the customer’s transaction and counterparty.
Identity verification would also form part of the proposed requirements. However, FinCEN has now withdrawn the notice of proposed rulemaking. The agency said it considered public comments before ending the proposal.
FinCEN Also Withdraws Crypto Mixing Proposal
FinCEN also withdrew another proposed rule concerning convertible virtual currency mixing. That proposal would have designated mixing as a class of transactions of primary money laundering concern. It also would have imposed a special measure.
FinCEN withdrew both proposals as part of the Trump administration’s deregulatory agenda. According to FinCEN, the withdrawals support efforts to ensure digital asset regulations are “fit-for-purpose.” The agency said it will take no further action on the wallet reporting proposal.
