At a glance

  • The Financial Crimes Enforcement Network (FinCEN) withdrew its October 2023 finding that international crypto mixing is a class of transactions of primary money laundering concern, and the proposed rule that relied on it, effective 6 Oct.
  • FinCEN said commenters warned the rule’s broad definition of mixing could chill legitimate activity and burden banks and exchanges, but that it will keep monitoring mixers and may act in future.

FinCEN withdrew its proposed special measure on convertible virtual currency (CVC) mixing in a notice published in the Federal Register on Tuesday, almost three years after the original proposal.

Section 311 of the USA PATRIOT Act lets FinCEN name a jurisdiction, institution or class of transactions as a “primary money laundering concern” and then impose one of five special measures on it. In 2023 it chose the first and mildest: extra recordkeeping and reporting.

What the FinCEN crypto mixing rule would have done

The proposed rule would have required covered financial institutions to report transactions they knew, suspected or had reason to suspect involved CVC mixing within or involving a jurisdiction outside the United States. Mixing services pool and reshuffle coins from many users to obscure their origin.

Why FinCEN pulled it

The withdrawal notice gives one reason. It cites “concerns from commentors” that the “expansive definition of CVC mixing” could chill legitimate activity and place a large reporting burden on covered institutions.

The notice does not say mixers are now acceptable. FinCEN “maintains that illicit actors continue to use mixers” to hinder investigations, it says, and will monitor mixer activity for money laundering, terrorist financing and other illicit finance. The document is signed by Deputy Director Jimmy L. Kirby, according to the GovInfo text.

The withdrawal sits alongside other US crypto rule work this month, including the CFTC’s request for comment on retail crypto transactions published on 5 Oct.

Related: CFTC’s retail crypto notice

What happens next

Nothing is due from industry: a withdrawal has no comment period. The notice says FinCEN “may take appropriate steps in the future,” which means any new mixing rule would have to start again with a fresh proposal.

This article is for information only and is not investment advice.