FinCEN Withdraws Crypto Mixing and Unhosted-Wallet Proposals
On 6 October 2026 FinCEN withdrew two long-pending crypto proposals: its 2023 plan to treat international crypto mixing as a class of transactions of primary money laundering concern, and its 2020 rule on transactions with unhosted wallets. The day before, it proposed cutting off funds transfers involving companies controlled by the Russia-linked A7 Network.
Both withdrawals cite the July 2025 report of the President's Working Group on Digital Asset Markets, set up under Executive Order 14178. FinCEN describes the unhosted-wallet withdrawal as part of efforts to ensure digital asset regulations are "fit-for-purpose".
What Was Withdrawn
- CVC mixing (proposed October 2023). The section 311 proposal would have required covered financial institutions to report transactions they know, suspect or have reason to suspect involve international crypto mixing — including the amount, the mixer used, wallet addresses, transaction hashes and IP addresses — and to keep customer records. FinCEN says commenters were concerned that the broad definition of mixing could chill legitimate activity and impose a large reporting burden. It maintains that illicit actors still use mixers and says it will continue to monitor them.
- Unhosted wallets (proposed December 2020). The rule would have required banks and money services businesses to report transactions over $10,000 with unhosted or "otherwise covered" wallets, and to keep records and verify customer identity for transactions over $3,000. FinCEN says it will take no further action on it.
The A7 Network Proposal
Under section 9714 of the Combating Russian Money Laundering Act, FinCEN has found that transactions involving any company outside the United States controlled by the A7 Network are a class of transactions of primary money laundering concern in connection with Russian illicit finance. FinCEN describes A7 as a sanctions evasion and money laundering service with ties to Russia, used by a wide range of illicit actors including Iran and its terrorist proxies, and administered with sanctioned entities such as the Garantex and Grinex exchanges.
The proposal would prohibit covered financial institutions from certain transmittals of funds involving that class of transactions. The notice describes red flags including goods descriptions that do not fit a supplier's business profile, unusual payment routing through A7-controlled companies, and falsified or AI-altered invoices. Comments are due by 4 November 2026. For related typologies, see our guide to sanctions evasion red flags.
The Wider 2026 Picture
The withdrawals are part of a broader reset of US AML rulemaking this year. In April 2026 FinCEN proposed a new rule on AML/CFT programmes, replacing its 2024 proposal and expanding its own supervisory and enforcement role, and, with OFAC, proposed AML and sanctions programme rules for payment stablecoin issuers under the GENIUS Act. In August 2026 its final rule narrowed beneficial ownership reporting under the Corporate Transparency Act to foreign companies registered in the US.
What It Means for Compliance Teams
- Mixer exposure is still a risk indicator. Without a dedicated reporting rule, it continues to be handled through risk assessment, blockchain analytics and suspicious activity reporting.
- Unhosted-wallet transactions remain subject to existing BSA obligations and a risk-based approach; there is no new reporting threshold.
- Check payment and trade-finance flows for companies linked to the A7 Network and its sanctioned partners, and consider responding to the consultation by 4 November 2026.
For the US framework as a whole, see our plain-English guide to the BSA and our FinCEN regulation page.
Sources: FinCEN withdrawal of CVC mixing proposal, 91 FR 63513 · FinCEN withdrawal of unhosted wallet proposal, 91 FR 63514 · FinCEN A7 Network proposed rule, 91 FR 63208. General information, not legal advice.
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