In January 2025 FinCEN issued a Notice of Proposed Rulemaking (NPRM) titled “Requirements for Certain Transactions Involving Convertible Virtual Currency Mixing”. The proposal would create a special measure under Section 311 of the USA PATRIOT Act, requiring U.S. financial institutions to file reports whenever they know, suspect, or have reason to suspect a customer is using a mixing service.
How FinCEN Defines A Mixing Service
FinCEN proposes a broad definition covering any service designed to conceal the source, destination, or amount of CVC. Examples include:
- Custodial mixers and tumblers.
- Non-custodial CoinJoin coordinators when they coordinate liquidity for others.
- Cross-chain swaps or layering services built specifically to obfuscate flow.
Reporting Requirements
Covered financial institutions (banks, MSBs, exchangers) would need to:
- Collect identifying information about the customer and counterparties.
- Report the transaction within 30 days, including wallet addresses, transaction hashes, and amounts.
- Maintain records for five years and make them available to FinCEN on request.
Unlike standard SARs, these reports would be mandatory for any mixer exposure, not just suspicious behavior.
Implications
- U.S. exchanges will likely auto-report any deposit tied to a known mixer, even if the user passes KYC.
- Non-custodial coordinators that charge fees may be forced to register as MSBs to avoid being labeled uncooperative.
- Expect more aggressive blockchain analytics, since institutions must prove they checked for mixing links.
Status
As of early 2025 the rule is in the comment stage. Industry groups argue the definition is too broad and could chill legitimate privacy use cases. Nonetheless, FinCEN has signaled it intends to finalize the rule, citing the Helix, Bitcoin Fog, and Sinbad cases as justification.
