By PAUL O’DONOGHUE, Senior Correspondent
THE U.S. has withdrawn two proposed rules which would have restrictions on transactions involving self-custody wallets and crypto mixers.
FinCEN, the U.S. Treasury’s AML unit, said it was scapping the proposals “part of the Trump Administration’s deregulatory agenda”.
The measures were:
- A proposal that would have imposed recordkeeping, verification, and reporting requirements on certain transactions involving convertible virtual currencies involving unhosted wallets.
- A proposal that would have imposed a special measure with regards to convertible virtual currency mixers
Previously, US officials announced the measures due to concerns over the role of crypto and digital assets in financial crime.
The first proposal covering unhosted wallets dates to December 2020. These are wallets where users control their own private keys rather than relying on an exchange or other service.
Under the proposal, banks and money services businesses would have had to keep records of transactions above $3,000. Those records would include information about the customer and counterparty. Banks and MSBs would also have had to verify their customer’s identity.
For transactions above $10,000, they would have had to report additional information to FinCEN. This included details about the transaction and the person or wallet on the other side. Multiple transactions exceeding $10,000 within 24 hours would also have been covered.
Pushback on rules targeting crypto wallets
The proposal attracted more than 7,500 public comments. The filing said concerns included costs, privacy and the difficulty of identifying people who control self-custodied wallets outside a financial institution’s system.
The second proposal came in October 2023 and targeted cryptocurrency mixing. Mixers combine funds from different users before redistributing them. This can make it harder to trace the origin or destination of particular funds.
FinCEN had proposed additional reporting and recordkeeping requirements for certain transactions involving crypto mixing.
Cancelling the proposals, FinCEN said the move is part of “ongoing efforts to ensure digital asset regulations are fit-for-purpose”.
The formal notice for the first withdrawal is [HERE] and the second is [HERE].
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