FinCEN withdraws the unhosted-wallet rule and the 2023 mixer plan

On October 5, 2026 the Financial Crimes Enforcement Network (FinCEN) withdrew the unhosted-wallet rule and a second unfinished proposal on convertible virtual currency (CVC) mixing. Neither text had become final. Banks, money service businesses (MSBs) and other covered firms do not have to build the reports those drafts described.

The RIN trap

The docket numbers are the detail a compliance system can miss. Both notices were signed by Jimmy L. Kirby, Deputy Director of FinCEN. The public-inspection copies are stamped filed at 8:45 a.m. on October 5 and scheduled for Federal Register publication on October 6, 2026. The wallet withdrawal, document 2026-20430, is RIN 1506-AB47 and pulls the proposal at 85 FR 83840 (December 23, 2020). The mixing withdrawal, document 2026-20429, carries that same RIN. The October 23, 2023 notice of proposed rulemaking (NPRM) at 88 FR 72701 is on the Federal Register record as RIN 1506-AB64. A search that stops at the 2023 number will not find the withdrawal.

An unhosted wallet, in the 2020 draft, was the case "when a financial institution is not required to conduct transactions from the wallet." An otherwise covered wallet sat at a firm outside the Bank Secrecy Act (BSA), in a foreign jurisdiction FinCEN identified. Banks and MSBs would have filed a report and verified the customer's identity when a counterparty used either wallet and a CVC or legal-tender digital-asset transaction was greater than $10,000, or when transactions aggregated to greater than $10,000 in 24 hours. They would also have kept records, and verified identity, when that counterparty transaction was greater than $3,000. The withdrawal says FinCEN will take no further action on that NPRM. The duty would have fallen on the sending bank or MSB, not on a custodian that already holds the keys. The December 23, 2020 proposal is the text being closed.

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The mixer draft used section 311 of the USA PATRIOT Act. Covered firms would have reported a CVC transaction they know, suspect, or have reason to suspect involves mixing within or involving a jurisdiction outside the United States. Six techniques were in scope: pooling from multiple persons or addresses; code that manipulates a transaction's structure; splitting value across independent transfers; chains of single-use wallets; exchanging between types of CVC; and user-initiated delays. The report would have named the amount, the CVC type, the mixer, the customer's wallet address, the transaction hash, the IP address and the customer's identity. FinCEN is withdrawing the finding that international CVC mixing is of primary money laundering concern, and proposed special measure one with it.

Neither notice names an exchange. Coinbase, Kraken and Binance do not appear. Withdrawing an NPRM does not rewrite BSA rules already in force, and these notices do not claim that it does. An MSB does not receive a section 311 mixing template, or the unhosted-wallet counterparty file at the greater-than-$3,000 and greater-than-$10,000 lines. That is separate from the self-custody path proposed under the Advisers Act, from FinCEN's $125 million order on UBS FX wire data, and from the July 2026 stablecoin-issuer rules. It also sits apart from the FATF Travel Rule enforcement picture.

The mixing withdrawal, over Kirby's signature, states the limit of the retreat:

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 commentors that the expansive definition of CVC mixing in the proposed rule could have a chilling effect on legitimate activity and place a large reporting burden on covered financial institutions.

The notice quotes the July 2025 President's Working Group report under Executive Order 14178: "the Trump Administration supports the ability of lawful users of digital assets to privately transact on a public blockchain." The footnote links that White House report. FinCEN's October 5 release says the bureau considered the comments and is withdrawing both proposals "as part of the Trump Administration's deregulatory agenda and ongoing efforts to ensure digital asset regulations are fit-for-purpose."

Each notice takes effect on Federal Register publication, which the filed copies schedule for October 6, 2026, while the effective-date line is still a placeholder. Comments on the mixing NPRM were due January 22, 2024. The filings close both dockets. On this record, international CVC mixing is no longer a class of primary money laundering concern, and the unhosted-wallet rule will not require the counterparty report. FinCEN says it will keep monitoring mixers for illicit finance and may act again. A narrower special measure is the reopen risk.

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