A modest win for financial privacy amid tightening surveillance.
FinCEN, the U.S. Treasury unit charged with combating financial crime, has pulled back its plan to require banks and other financial players to disclose cryptocurrency deals that they “know, suspect, or have reason to suspect” involve mixing with foreign jurisdictions. The rule, introduced in October 2023, was rescinded this week after pushback from the crypto sector and concerns about privacy.
“Although FinCEN still insists that criminals continue to use mixers and similar tools to hinder law enforcement, the withdrawal reflects feedback from commenters who warned that the broad definition of Convertible Virtual Currency mixing in the proposed rule could chill legitimate activity and impose a heavy reporting burden on covered financial institutions,” the withdrawal statement reads.
The Patriot Act of 2001 grants the Treasury authority to compel banks and other institutions to report on their own customers for national security purposes. Originally designed for counterterrorism, this surveillance has gradually broadened across the U.S. and global financial system. The Trump administration sought to leverage FinCEN to address illegal immigration and created discreet “predictive intelligence” units within the Department of Homeland Security that examine Americans’ financial activity, among other data. However, in the realm of cryptocurrency, the administration has pursued a pro-privacy stance.
In a July 2025 report, cited by the latest FinCEN notice, the White House argued that overly burdensome reporting could undermine the competitiveness of U.S. crypto businesses, and that legitimate digital-asset users may rely on mixers to preserve privacy when transacting on public blockchains. The President and his family have been notably active investors in cryptocurrency, and critics have raised concerns about a potential conflict of interest.
The majority of crypto transactions occur on a public blockchain ledger. A mixer, also known as a tumbler, pools several cryptocurrency transfers to obscure the link between senders and recipients. For instance, if Alice intends to send Bob some bitcoin, she could route it through a mixer, which would also handle transactions involving Carol and Dan, as well as Charlie and David. To an observer parsing the blockchain, the funds sent by Alice could end up with Bob, Dan, or David, and Bob’s receipt could have originated from Alice, Carol, or Charlie.
FinCEN first flagged mixers in a 2019 guidance document, insisting that “a money transmitter cannot evade its regulatory obligations because it chooses to provide money transmission services using anonymity-enhanced CVC,” though it stopped short of establishing any new regulatory expectations or requirements. In 2022, the Treasury’s Office of Foreign Assets Control shut down two mixers for allegedly helping launder money stolen by North Korean hackers. A federal court overturned the sanctions on one mixer, Tornado Cash, in 2024.
The Biden administration branded mixers a “primary money laundering concern” and proposed the new FinCEN reporting rules in October 2023. Much of the messaging tied the rule to recent Hamas attacks on Israel. “The Treasury Department is aggressively combating illicit use of all aspects of the CVC ecosystem by terrorist groups, including Hamas and Palestinian Islamic Jihad,” Deputy Treasury Secretary Wally Adeyemo told reporters at the time. But the actual FinCEN proposal concentrated on North Korean and Russian cybercrimes and explicitly stated that a narrow approach centered on Hamas or other terrorist groups would be insufficient to address the relevant risks.
Industry groups pushed back. The Blockchain Association argued that there is nothing inherently suspicious about seeking the same level of privacy available for traditional financial transactions and warned that the rules could drive illicit digital-asset activity abroad where oversight may be weaker or nonexistent. Coinbase, the largest U.S. crypto exchange, predicted that the new FinCEN rule would simply lead to bulk reporting of non-suspicious transactions. Several other exchanges complained that the rule would undermine good cybersecurity practices.
The White House echoed these industry concerns in its July 2025 report, and the Treasury ultimately heeded the message. Yet the withdrawal notice hints that regulators have not abandoned the idea of curbing mixer activity entirely. “FinCEN will continue to monitor activity involving CVC mixers for signs of money laundering, terrorist financing, or other illicit finance activity, and may take appropriate steps in the future to mitigate any such activity,” the statement concludes.
