The U.S. Treasury Department has officially withdrawn a long-standing proposal that would have mandated banks and cryptocurrency firms to collect and report additional customer data when transferring large sums of digital assets to self-custodied wallets.
The Financial Crimes Enforcement Network (FinCEN) announced the withdrawal of the rule on Sunday, alongside a separate proposal targeting cryptocurrency mixing services. Neither regulatory proposal had been implemented.
The wallet reporting requirement was initially introduced in December 2020, during the final days of the first Trump administration.
Under the proposed rule, financial institutions and money services businesses, including crypto exchanges, would have been required to file reports for transactions exceeding $10,000 in cryptocurrency sent to or from unhosted wallets. This threshold would have applied to combined transactions within a 24-hour period. Additionally, firms would have been obligated to gather identifying details regarding both the customer and the recipient wallet.
An unhosted wallet refers to a digital wallet where the user retains direct control over their private keys, as opposed to keeping their assets on an exchange or with a traditional bank.
The proposal faced significant public scrutiny, garnering thousands of comments, and remained in a state of limbo for nearly six years before its official withdrawal.
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