FinCEN said in a Monday (Oct. 5) press release that it withdrew the proposals after considering public comments on them and as part of the Trump administration’s deregulatory agenda.
One proposal would have imposed recordkeeping, verification and reporting requirements on certain transactions involving convertible virtual currencies and unhosted wallets, according to the release.
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This proposed rule was published by FinCEN on Dec. 23, 2020, according to a FinCEN document announcing its withdrawal.
In a Dec. 18, 2020, press release announcing the proposal, the Treasury Department said FinCEN aimed to increase transparency in digital currencies and close loopholes that may be exploited by malign actors.
In the Monday document announcing its withdraw of the proposal, the regulator said: “As stated in the report issued by the President’s Working Group on Digital Asset Markets established by Executive Order 14178, ‘Strengthening American Leadership in Digital Financial Technology,’ FinCEN is withdrawing the NPRM [notice of proposed rulemaking] as part of the Trump Administration’s ongoing efforts to ensure digital asset regulations are fit-for-purpose. FinCEN will take no further action on this NPRM.”
The other withdrawn proposal would have imposed a special measure with regards to convertible virtual currency (CVC) mixing, per the release.
This proposed rule was published by FinCEN on Oct. 23, 2023. It found that CVC mixing, such as the pooling or aggregating of CVC from multiple persons that obfuscates the source of the CVC, is a class of transactions of primary money laundering concern and requires enhanced recordkeeping and reporting, according to a FinCEN document announcing its withdrawal.
When announcing the proposed rule in an Oct. 19, 2023, press release, FinCEN said that CVC mixing services were being used by illicit actors around the world and that the regulator aimed to promote transparency for CVC mixing services.
In its Monday document announcing its withdrawal of the proposal, the regulator said: “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 commenters 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.”
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