FinCEN's Crypto Mixing Rule: Proposed, Then Withdrawn

FinCEN's proposed rule on crypto mixing never took effect. It was published in October 2023 and withdrawn on 6 October 2026, so US financial institutions have no special mixing reporting duty from it. Mixers are still a risk category, though: other US rules still apply to them, prosecutors still pursue them, and AML checks still flag funds that pass through them.

What FinCEN proposed in 2023

On 19 October 2023 FinCEN, the US Treasury's financial intelligence unit, announced a proposed rule under section 311 of the USA PATRIOT Act. It would have named international convertible virtual currency (CVC) mixing a class of transactions of primary money laundering concern. FinCEN said this was the first time it had used section 311 against a class of transactions.^[1]

Section 311 lets Treasury find that a foreign jurisdiction, foreign institution, class of transactions or type of account is of primary money laundering concern. It can then impose one or more of five "special measures".^[2] FinCEN chose the first measure: extra recordkeeping and reporting. The proposal did not ban mixing or order banks to block it.^[3]

FinCEN's reasons included use of mixers by Hamas, Palestinian Islamic Jihad and North Korea.^[1] It pointed to earlier sanctions. In May 2022 OFAC sanctioned Blender.io, a Bitcoin mixer. Treasury said Blender had processed over $20.5 million from the Axie Infinity hack, which it tied to North Korea's Lazarus Group.^[4] The Tornado Cash designation came next; we cover its later removal from the sanctions list in a separate post.

What the rule would have required

The proposal covered transactions that a covered financial institution knew, suspected or had reason to suspect involved CVC mixing within or involving a jurisdiction outside the United States.^[3]

A broad definition. CVC mixing meant handling transactions in a way that hides their source, destination or amount. The listed methods were:^[3]

• pooling funds from several people or wallets;
• using code to coordinate or shape a transaction;
• splitting funds into a series of separate transfers;
• using single-use wallets or addresses;
• swapping between types of crypto or other digital assets;
• user-initiated delays.

A report within 30 days. For each covered transaction the institution would have reported to FinCEN within 30 calendar days of first detecting it. The report would include:^[3]

• the amount, in crypto and in US dollars;
• the type of crypto;
• the mixer used, if known, and its wallet address;
• the customer's wallet address;
• the transaction hash and date;
• IP addresses and timestamps;
• a narrative describing the activity.

Institutions would also keep customer records: full name, date of birth, address, email and an identifying number.^[3] Comments were due by 22 January 2024.^[3]

The 2026 withdrawal

FinCEN published the withdrawal in the Federal Register on 6 October 2026. It withdrew both the finding and the proposed rule, effective that day.^[2]

The notice gives two reasons. First, it cites a July 2025 report by the President's Working Group on Digital Asset Markets. That report said lawful users may use mixers for financial privacy on public blockchains, and it recommended that Treasury reconsider the proposal. Second, commenters warned that the broad definition of mixing could chill legitimate activity and put a heavy reporting burden on institutions.^[2]

The notice also keeps the door open. FinCEN says illicit actors still use mixers. It will keep watching mixer activity for signs of money laundering or terrorist financing and may act in the future.^[2]

What still applies to mixers

The withdrawal removed a proposal, not existing law.

Mixing services are money transmitters. FinCEN's 2019 guidance says a person who accepts crypto and sends it on in a way designed to hide the sender is a money transmitter. Hiding the source does not change that status. Software developers who only supply anonymizing tools are treated differently: they are not money transmitters.^[5]

Prosecutions continue. The founders of Samourai Wallet, a Bitcoin wallet with the "Whirlpool" mixing service, pleaded guilty to conspiring to run a money transmitting business that moved criminal proceeds. In November 2025 a federal judge in New York sentenced them to five and four years in prison. Prosecutors said Samourai moved over $237 million in criminal proceeds.^[6]

Sanctions apply case by case. OFAC still sanctions specific mixers, as it did with Blender.io.^[4] A sanctions flag depends on a specific designation, not on the withdrawn rule.

Why AML checks still flag mixers

An AML checker does not apply section 311. It looks at where coins came from. Mixing breaks the trail between source and destination, so exchanges often treat mixer exposure as high risk; see our mixer risk category for details.

So the withdrawal changes little for an ordinary user. Exchanges set their own risk rules. A deposit with direct mixer history can still be held for review, whatever the status of the FinCEN proposal. If that happens, our guide on what to do when an exchange freezes funds walks through the steps.

What to do

1. Do not read the withdrawal as approval. Mixing services remain money transmitters under FinCEN guidance, and operators have been prosecuted.
2. Check incoming funds before you accept them. A wallet screening shows mixer exposure before the coins reach your exchange account.
3. Keep records. If you used a privacy tool for a lawful reason, keep transaction hashes and a short explanation in case an exchange asks.
4. Watch for new rules. FinCEN says it may act again on mixers in the future.
5. Get advice for business decisions. This post is general information, not legal advice.