The United States government has officially halted efforts to track off-exchange crypto traffic. The Financial Crimes Enforcement Network (FinCEN) has decided to withdraw two proposed surveillance rules that had lingered in regulatory limbo for years. The withdrawal of these draft rules took effect Sunday, October 5, 2026, freeing private crypto wallet users and coin mixing services from the threat of heightened surveillance designed under previous administrations.
The first rule to be discarded is a proposal dating back to December 2020, during the first Trump administration. From the start, the rule aimed to impose obligations on banks and various money services businesses. Had it been enacted, these institutions would have been required to report to the federal government whenever a customer sent crypto assets worth more than $10,000 to a private wallet, also known as an unhosted wallet. The $10,000 threshold was even designed to capture multiple smaller transactions accumulated within a 24-hour window.
The Burden of Customer Data Collection
The fallout from the 2020 proposal extended far beyond mere dollar-figure reports. At the time, FinCEN designed the rule to compel financial service providers to collect comprehensive data on sending customers, while also identifying the wallet on the receiving end of the transfer. For context, unhosted wallets operate purely as digital wallets where individuals maintain full control over their private keys, without needing to surrender asset management to third-party entities such as centralized exchanges or conventional banks.
Following the private wallet rule, the second discarded proposal was a draft rule from 2023. This proposal sought to classify crypto mixing service transactions as a primary money laundering concern. Such a severe classification would have paved the way for the government to impose sweeping additional reporting requirements on any financial institution detected handling them.
Part of the Deregulation Agenda
In reality, neither of these controversial draft regulations ever took effect. Both remained stalled at the proposal stage for years, despite drawing thousands of fiercely critical comments from the crypto public. In its official announcement, FinCEN stated that the decision to withdraw both rules aligns with the current Trump administration’s deregulation agenda, describing the move as an effort to build a more targeted digital asset regulatory framework.
The decision to halt private wallet tracking was previously confirmed through an initial release. However, detailed reporting from CoinDesk now clarifies the historical context and the sheer scope of the reporting burden that has been averted. With the elimination of these two draft rules, crypto holders who choose to self-custody their assets no longer face the risk of multilayered data harvesting from financial institutions.
Reported via CoinDesk.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
