FinCEN announced on October 5, 2026, that it is withdrawing two proposed rules covering digital-asset transactions, specifically convertible virtual currencies, as part of the Trump Administration’s deregulatory agenda and its ongoing efforts to ensure digital-asset regulations are fit for purpose.
According to FinCEN’s announcement of the withdrawals, the agency considered the comments submitted in response to the two proposals before withdrawing them. The withdrawals don’t eliminate existing federal anti-money-laundering obligations for covered digital-asset businesses.
They remove two proposed regulatory approaches that had not become final rules, while Treasury’s own risk assessment work continues to identify where illicit use of digital assets remains concentrated.
What the Two Withdrawn Proposals Covered
The first withdrawn proposal would have imposed recordkeeping, verification, and reporting requirements specifically on transactions involving convertible virtual currencies and unhosted wallets, meaning wallets where the user controls the assets directly rather than relying on a third-party custodian.
The second would have imposed a special measure regarding convertible virtual currency mixing, the practice of pooling or obscuring digital-asset transactions to conceal their origin or destination.
| Withdrawn Proposal | What It Would Have Required |
| Unhosted wallet proposal | Recordkeeping, verification, and reporting for certain CVC and unhosted-wallet transactions |
| CVC mixing proposal | A special measure regarding convertible virtual currency mixing |
Table 1. The two proposed digital-asset rules FinCEN withdrew on October 5, 2026.
FinCEN’s announcement is brief and doesn’t detail the specific thresholds, legal provisions, or reasoning that shaped either original proposal, stating only that it considered the comments received before withdrawing both.
The distinction matters: FinCEN is withdrawing proposals that never became final regulations, not rolling back obligations already in effect under the Bank Secrecy Act.
Treasury’s Risk Assessment Provides Separate Context
The U.S. Department of the Treasury’s 2026 National Money Laundering Risk Assessment, the fifth iteration of a report the United States has published for over a decade, offers a different and separate piece of context.
According to the assessment itself, it was prepared pursuant to Sections 261 and 262 of the Countering America’s Adversaries Through Sanctions Act, as amended by Section 6506 of the FY22 National Defense Authorization Act, covering the period of January 1, 2024 through December 31, 2025. It was published in March 2026, months before FinCEN’s October withdrawal, so the two documents aren’t tied to the same announcement.
The assessment identifies fraud, drug trafficking, cybercrime, human trafficking, human smuggling, and corruption as the top money laundering threats to the United States, noting that illicit actors increasingly rely on digital assets, alongside social media and encrypted messaging, to receive and launder funds.
Digital Asset Investment Scams Are a Specific, Named Concern
Within its broader discussion of investment fraud, the assessment singles out digital asset investment scams, some commonly called “pig butchering” scams, as one of the most damaging forms of investment fraud it tracks.
The report states that in 2024, victims reported USD 5.8 billion in losses related to digital asset investment scams to the FBI’s Internet Crime Complaint Center, a 47% increase over the prior year.
| Reported Harm (2024) | Figure, per Treasury’s Assessment |
| Digital asset investment scam losses | USD 5.8 billion |
| Year-over-year increase | 47% |
Table 2. Digital asset investment scam losses as reported in Treasury’s 2026 National Money Laundering Risk Assessment.
Treasury’s assessment cautions that this figure likely represents an undercount, since disclosures to the Internet Crime Complaint Center are voluntary and victims often don’t report these scams, partly out of shame over having been deceived.
The assessment describes these scams as typically beginning with perpetrators contacting victims on social media, dating platforms, or text message, gradually introducing the idea of investing in digital assets before directing victims to send funds to accounts controlled by the scammers.
The Report Ties Digital-Asset Fraud to Broader Criminal Networks
Treasury’s assessment places digital asset investment scams within a wider pattern of transnational criminal organizations operating industrial-scale scam centers, describing cases where proceeds were laundered through shell companies and converted into digital assets, including stablecoins, before distribution to co-conspirator-controlled wallets.
This context sits separately from FinCEN’s withdrawal decision. One document is a specific agency action removing two proposed rules.
The other is a standalone risk assessment examining where illicit finance threats, including those involving digital assets, are concentrated, together showing a more complicated picture than a simple shift toward stricter or looser digital-asset oversight.
What the Withdrawal Does Not Change
FinCEN’s decision doesn’t eliminate the Bank Secrecy Act obligations that already apply to covered institutions and digital-asset businesses. Companies evaluating how the unhosted-wallet or mixing proposals might affect operations no longer need to prepare for those specific frameworks, but existing recordkeeping, reporting, and AML requirements remain in place independent of this withdrawal.
What Comes Next
FinCEN’s decision removes the two proposed rules from the active pipeline, but its announcement doesn’t indicate whether the agency intends to revisit unhosted wallets or mixing through a different approach later.
Treasury’s risk assessment remains a standing reference document that continues to identify digital asset investment scams as a significant source of reported victim losses.
What this means for you: FinCEN’s October 5 withdrawal removes two proposed digital-asset rules, one covering unhosted wallets and one covering convertible virtual currency mixing, that had not become final regulations. It does not eliminate existing Bank Secrecy Act obligations for covered digital-asset businesses.
Separately, Treasury’s 2026 National Money Laundering Risk Assessment, published months earlier in March, reports that digital asset investment scams cost victims an estimated USD 5.8 billion in 2024, a 47% increase from the prior year, underscoring that regulatory withdrawal of specific proposals doesn’t mean the underlying illicit-finance risks have disappeared.
This article is for informational purposes only and does not constitute legal, financial, investment or compliance advice. Digital-asset businesses should consult qualified professionals regarding their specific regulatory obligations.
