# FinCEN Drops Crypto Mixing Rules After Three Years

> FinCEN withdraws crypto mixing and unhosted wallet rules from 2023, ending years of compliance burden for privacy tools.
- Title: FinCEN Drops Crypto Mixing Rules After Three Years | Shortify
- Summary: FinCEN withdraws crypto mixing and unhosted wallet rules from 2023, ending years of compliance burden for privacy tools. FinCEN scrapped its 2023 crypto…
- Keywords: fincen, crypto mixing, unhosted wallet rule, treasury, patriot act, tornado cash, roman storm, cftc, futures commission merchant, startups, business, Drops
- Source: Startup Fortune — https://startupfortune.com/fincen-withdraws-its-crypto-mixing-and-unhosted-wallet-rules-three-years-later
- Published: 2026-10-10T23:37:19+00:00
- Read time: 1 min
- Topics: fincen, crypto mixing, unhosted wallet rule, treasury, patriot act, tornado cash, roman storm, cftc, futures commission merchant, startups, business
## FinCEN withdraws crypto mixing rules
Treasury's financial crimes unit erased the regulatory shadow over crypto mixers since 2023 by scrapping its mixing designation and a 2020 rule targeting self-hosted wallets.
## Rules sit unfinished for years
FinCEN filed notice for Federal Register publication on October 6 withdrawing its 2023 finding that international crypto mixing is a class of transactions of primary money laundering concern under Section 311 of the Patriot Act.
## Compliance burden estimated at 1.47m hours
According to The Block, the agency estimated its mixing rule would have forced roughly 15,000 institutions to file reports, burning 1.47 million hours of compliance work annually.
## Chilling effect on legitimate activity
The rule's broad definition of mixing risked a chilling effect on legitimate activity, lumping privacy software with money laundering tools under one label.
## Tornado Cash sanctions reversed
A federal appeals court vacated OFAC's sanctions on Tornado Cash in November 2024, ruling the agency overstepped by sanctioning immutable smart contracts instead of people.
## Roman Storm case ongoing
Tornado Cash co-founder Roman Storm was convicted in August 2025 on one count of conspiring to run an unlicensed money-transmitting business, carrying up to five years.
## Regulatory shift for privacy tools
FinCEN explicitly kept its door open: illicit actors still use mixers to frustrate investigations, but it won't write a rule broad enough to catch everyone.
## Key takeaway

FinCEN scrapped its 2023 crypto mixing rule and 2020 unhosted wallet rule after estimating 1.47 million compliance hours annually.