Anti-Laundering Rule Targeting Crypto Mixers Withdrawn

The United States Treasury Department is officially discarding an October 2023 proposed rule that would have classified international cryptocurrency mixing as a primary money-laundering concern. The Financial Crimes Enforcement Network, the department's financial crimes bureau, published a withdrawal notice on Monday halting the initiative.

Had the rule been implemented, it would have marked the first time the agency used section 311 of the USA Patriot Act to target an entire class of transactions rather than a specific country or foreign bank. In a press release, the bureau explained that abandoning the proposal is "part of the Trump administration's deregulatory agenda." The formal notice also highlighted feedback from commenters who warned that the strict requirements would create "a chilling effect on legitimate activity" while placing "a large reporting burden on covered financial institutions."

Compliance Costs and Burdens

The scrapped framework would have mandated that covered institutions file comprehensive reports on any digital asset transaction they suspected of involving foreign mixers, services designed to obscure the origins of pooled funds. Required data would have included transaction hashes, wallet addresses, customer identities, and IP addresses.

According to the agency's own estimates, approximately 15,000 institutions would have been forced to comply, spending an average of 98 hours per year on the task for a combined 1.47 million hours. The original proposal noted that identifying indirect, upstream mixer exposure could have required specialized analytics tools costing "in excess of tens of thousands of dollars per license."

Despite this potential cost, the banking sector raised few objections. The Independent Community Bankers of America, one of the only bank trade groups to submit a public comment, actually argued the proposal did not go far enough. Instead, the loudest opposition came from the crypto sector, including the Blockchain Association.

Illicit Activity and Policy Shifts

The bureau originally developed the rule to combat ransomware operators and North Korean cybercriminals. Earlier this year, the Treasury reported that North Korea utilizes laundered digital funds to finance its weapons programs. A March publication, the 2026 National Money Laundering Risk Assessment, continues to classify mixers as tools criminals "commonly use."

While conceding that "illicit actors continue to use mixers," the withdrawal notice references a July 2025 White House report from the President's Working Group on Digital Asset Markets. That report recommended the Treasury "consider next steps" and noted that "lawful users of digital assets may leverage mixers to enable financial privacy when transacting through public blockchains."

However, the agency's withdrawal documentation misquoted the July 2025 report, falsely claiming that page 100 stated "the Trump Administration supports the ability of lawful users of digital assets to privately transact on a public blockchain." A Treasury spokesperson did not answer on-the-record questions regarding the fabricated text, which does not appear anywhere in the White House report.

Alongside the mixer rollback, the bureau also formally withdrew a December 2020 proposal, initially drafted in the final weeks of Donald Trump's first term, that was designed to regulate unhosted digital wallets.