FinCEN withdraws Section 311 crypto mixing proposal

The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) withdrew its proposed rule on international convertible virtual currency mixing, citing concerns that its broad definition could chill legitimate activity and burden financial institutions. The withdrawal, effective October 6, ends a proposal that would have required covered institutions to report certain mixing transactions and keep related customer records. FinCEN said it will continue monitoring mixers for illicit finance. Its Federal Register withdrawal notice sets out the scope of the proposal and the agency’s reasons.

What did the proposed Section 311 measure cover?

The proposal would have treated international CVC mixing as a class of transactions of primary money laundering concern under Section 311 of the USA PATRIOT Act. That finding would have enabled a special measure requiring covered financial institutions to collect and report information about transactions they knew, suspected, or had reason to suspect involved mixing within or involving a jurisdiction outside the United States.

FinCEN’s 2023 definition covered activity that obscured a transaction’s source, destination, or amount, regardless of the protocol or service used. It included pooling or aggregating funds, using code to coordinate transaction structures, splitting funds across independent transfers, routing funds through single-use wallets, exchanging between types of digital assets, and facilitating user-initiated delays.

The proposed reporting was transaction-specific. Reports could have included the amount and type of CVC, the mixer used, customer-associated wallet addresses, transaction hashes, dates, IP addresses, and a narrative describing the activity. Covered institutions would also have had to retain identifying information for customers associated with covered transactions. These were proposed obligations; the rule was never finalized.

Why did FinCEN withdraw the proposal?

FinCEN said commenters objected that the definition swept broadly across privacy techniques and could impose a large reporting burden. The agency’s October 5 announcement said the withdrawals followed its review of public comments and were part of the administration’s effort to make digital asset rules fit for purpose.

The notice also cited a July 2025 report from the President’s Working Group on Digital Asset Markets. That report said lawful users may use mixers for financial privacy when transacting on public blockchains and recommended that Treasury consider next steps for the proposal. FinCEN nonetheless maintained that illicit actors use mixers and other tools to hinder law enforcement investigations.

What changes for financial institutions and mixers?

The withdrawal removes the proposed Section 311 finding and the associated special measure from this rulemaking. Because the proposal had not taken effect, its withdrawal does not repeal a reporting requirement that institutions had already been following under this rule. FinCEN said it would continue monitoring CVC mixer activity for signs of money laundering, terrorist financing, or other illicit finance, and could take appropriate steps in the future.

The action narrows this specific regulatory path; it does not establish that mixer use is lawful in every context or prevent other enforcement. The notice withdraws the proposed finding and rule, while reserving FinCEN’s ability to monitor activity and respond to illicit finance. For institutions, the detailed mixer-specific reporting and recordkeeping described in the 2023 proposal will not be imposed through this rulemaking.

Sources and documents

• Federal Register withdrawal notice — govinfo.gov
• October 5 announcement — fincen.gov