The US Treasury has withdrawn a controversial plan to track personal cryptocurrency wallets, marking a significant shift in digital asset regulation. According to reports from The Block and Coin Center, the Financial Crimes Enforcement Network (FinCEN) announced it will take no further action on the 2020 proposal that would have required banks and exchanges to record transfers above ₹2.5 lakh and report those above ₹25 lakh. The withdrawal represents a complete abandonment of the original regulatory framework that never took effect. The decision was officially announced on October 5, 2026, with formal publication scheduled for October 6. Deputy Director Jimmy L. Kirby signed both withdrawal notices, which were filed for public inspection on October 5. As reported by AMBCrypto, FinCEN stated that withdrawing these proposals was part of an ongoing process to develop better rules that are relevant to regulating cryptocurrencies with regard to public comment.
The withdrawal aims to keep digital asset rules "fit-for-purpose," citing a July 2025 White House crypto report as justification. As reported by The Block and Coin Center, the FinCEN filing states that "The Trump Administration supports the ability of lawful users of digital assets to privately transact on a public blockchain." The rule takes effect on publication in the Federal Register on October 6, providing regulatory clarity for the cryptocurrency industry. Coin Center characterized the move as a "major victory for financial privacy" that avoids overreach in monitoring legal transactions. Since neither of these proposals resulted in final rules, their withdrawal will not result in a reduction in current compliance obligations, but prevents these new proposed requirements from developing into future rules for financial institutions.
The Treasury withdrew two specific FinCEN proposals targeting different aspects of cryptocurrency usage. According to Coin Center, the first proposal would have required financial institutions to collect and retain counterparty information for transactions involving non-custodial wallets exceeding $3,000, with reports to FinCEN for any such transactions exceeding $10,000. Under the proposed framework, institutions would have kept transaction and counterparty records and verified their customer's identity when a covered transfer exceeded $3,000. For transactions above $10,000, they would also have submitted a report to FinCEN. The reporting threshold also covered several transactions totaling more than $10,000 within 24 hours, covering deposits, withdrawals, exchanges, payments and other transfers. The second proposal withdrew the October 2023 finding that international convertible virtual currency mixing constituted a class of transactions of primary money laundering concern, alongside the proposed reporting measure attached to that finding.
Building on FinCEN's efforts to address potential compliance friction, the Commodity Futures Trading Commission (CFTC) is now moving toward clearer rules for crypto markets. The CFTC has established a public-comment period for retail crypto transactions under Section 2(C)(2)(D), representing an initial step toward establishing a national framework for regulating U.S. crypto markets. Rather than targeting individual products, the CFTC seeks input on a broader national framework that would include defining a new market category for cryptocurrencies and other digital assets. Proposed rules could require customer-asset segregation, capital safeguards, anti-money-laundering controls, and proof of reserves. The CFTC also intends to accept external wallet deliveries within 28 days as evidence of "actual" delivery, with public comments due within 60 days.
While personal wallet tracking and mixing rules have been withdrawn, existing regulatory requirements remain in place. As reported by The Block, firms must continue suspicious activity reports and sanctions screening. Every Bitcoin transfer still appears on a public ledger, where wallet payments can be traced. The regulatory changes come as prosecutors continue pursuing mixing-related cases, with developer Roman Storm facing a Tornado Cash retrial in April 2027 over the Ethereum-based mixing service. Coin Center emphasized that the withdrawal "finally closes this door," marking a significant victory for financial privacy in liquidity and crypto markets. The agency maintained that criminals use mixing tools to obstruct investigations and would continue monitoring for money laundering, terrorist financing and other illicit financial activity. Under the proposed framework, platforms offering margin, leverage, or financing could enter a dedicated federal registration pathway requiring stronger controls around customer assets, proof of reserves, and market conduct.
