FinCEN drops proposed $10,000 rule for crypto wallet transfers

Sending crypto from an exchange to a wallet you control will not trigger the proposed federal $10,000 report: FinCEN has withdrawn the plan before it ever took effect.

That matters because the proposal would have put reporting and identity checks on the financial firms handling covered transfers, not on wallet owners filing a new form.

Which wallet transfers were covered?

The proposal covered certain transfers involving unhosted wallets, where the user controls the private keys, and some wallets hosted in foreign jurisdictions identified by FinCEN. The agency announced the withdrawal on October 5; the Federal Register says it took effect on October 6, ending a proposal first published in December 2020, nearly six years ago. Under the proposal, banks and money-service businesses, including crypto exchanges, would have had to report a covered transfer above $10,000, or multiple transfers totaling more than $10,000 within 24 hours, and verify their customer’s identity. The Federal Register notice also says firms would have had to keep records and verify their customer’s identity for covered transfers above $3,000.

What changes for an exchange customer?

For customers, the withdrawal means this particular proposal will not add a new reporting step for transfers to or from a self-hosted wallet. FinCEN said it will take no further action on the proposal, which would have required financial institutions to collect information about the customer and the other side of a covered transfer. The rule was never in force, so its withdrawal does not reverse a reporting requirement that customers had already been following.

In practical terms, the proposal’s thresholds and extra recordkeeping will not become requirements under this rule. The $10,000 figure applied to reporting, including transfers aggregated over 24 hours; the separate $3,000 figure applied to recordkeeping. These were proposed duties for banks and money-service businesses, not a direct filing obligation for people holding their own keys.

Does this end crypto transaction reporting?

No; FinCEN’s action withdraws one proposed rule for transactions involving covered wallets. It does not create a general exemption for crypto transfers or settle what other requirements may apply to a customer or financial firm. FinCEN said it withdrew the proposal as part of the administration’s effort to make digital-asset rules “fit-for-purpose.” The agency’s announcement also notes a separate withdrawal involving crypto mixing, but that was a distinct proposal.

Source material

• The Federal Register notice — federalregister.gov
• The agency’s announcement — fincen.gov