The U.S. Treasury Department has decided to eliminate a long-standing proposal that would have mandated banks and cryptocurrency firms to report large transfers to self-custodied wallets.
On Sunday, the Financial Crimes Enforcement Network (FinCEN) announced the withdrawal of two proposals, one dating back to 2020, aimed at regulating self-custody and transactions involving crypto mixers. Neither had been enacted.
The 2020 proposal required financial institutions to report any transfers exceeding $10,000 to or from unhosted wallets, including cumulative transactions that surpassed this limit over a 24-hour period. Furthermore, firms would have needed to gather details about the customer and the recipient wallet.
An unhosted wallet allows users to maintain control over their private keys, as opposed to relying on exchanges or banks. This proposal attracted a significant number of public comments and remained unresolved for almost six years.
Additionally, FinCEN withdrew a 2023 proposal that would have categorized crypto mixing transactions as a primary money-laundering risk, which would have allowed for stricter reporting requirements on financial institutions involved.
According to FinCEN, both withdrawals align with the deregulatory approach of the Trump administration and aim to establish more appropriate regulations for digital assets.