SUPPLEMENTARY INFORMATION:

I. Statutory Provisions

Section 311 of the USA PATRIOT Act ^[1] (section 311), codified at 31 U.S.C. 5318A, grants the Secretary of the Treasury (Secretary) the authority to make a finding that “reasonable grounds exist for concluding” that any of the following “is of primary money laundering concern”:

(i) A jurisdiction outside of the United States;

(ii) One or more financial institutions operating outside of the United States;

(iii) One or more classes of transactions within, or involving, a jurisdiction outside of the United States; or

(iv) One or more types of accounts.^[2]

Upon making such a finding, the Secretary is authorized to require domestic financial institutions and domestic financial agencies—collectively, “covered financial institutions”—to take certain “special measures.” Specifically, pursuant to section 311, the Secretary may impose one or more of five possible special measures as safeguards to defend the U.S. financial system from money laundering and terrorist financing risks. Through special measures one through four, the Secretary may impose additional recordkeeping, information collection, and reporting requirements on covered financial institutions.^[3] Through special measure five, the Secretary may “prohibit, or impose conditions upon, the opening or maintaining in the United States of a correspondent account or payable-through account” for or on behalf of a foreign banking institution, if such correspondent account or payable-through account involves the financial institution operating outside of the United States found to be of primary money laundering concern.^[4]

The authority of the Secretary to administer the Bank Secrecy Act (BSA) ^[5] ( printed page 63514) and its implementing regulations, including the authority under section 311 to make such a finding and to impose special measures, has been delegated to FinCEN.^[6]

II. Finding and Notice of Proposed Rulemaking

On October 23, 2023, FinCEN published a proposed rule that, if finalized, would impose recordkeeping and reporting obligations on covered financial institutions to report certain information when they know, suspect, or have reason to suspect a CVC transaction involves the use of CVC mixing within or involving a jurisdiction outside of the United States.^[7] Under the proposed rule, FinCEN defined the term “CVC Mixing” as activity that entailed the facilitation of CVC transactions in a manner that obfuscates the source, destination, or amount involved in one or more transactions regardless of the type of protocol or service used, such as: (1) pooling or aggregating CVC from multiple persons, wallets, addresses, or accounts; (2) using programmatic or algorithmic code to coordinate, manage, or manipulate the structure of a transaction; (3) splitting CVC for transmittal and transmitting the CVC through a series of independent transactions; (4) creating and using single-use wallets, addresses, or accounts, and sending CVC through such wallets, addresses, or accounts through a series of independent transactions; (5) exchanging between types of CVC or other digital assets; or (6) facilitating user-initiated delays in transactional activity.^[8] Additionally, FinCEN proposed a definition for services called “CVC Mixers” as “any person, group, service, code, tool, or function that facilitates CVC mixing.” ^[9] The proposed rule would have required covered financial institutions to file a report with FinCEN containing certain information related to CVC Mixing transactions, such as the amount of CVC transferred, CVC type, CVC mixer used, CVC wallet address associated with customers, relevant transaction hashes, date of transactions, IP addresses, and a description of activity through a narrative. The proposed rule would have also required covered financial institutions to keep records of customers associated with covered transactions to include the customer's full identity, date of birth, address, email address, or unique identifying numbers.

As stated in the July 2025 report by the President's Working Group on Digital Asset Markets established by Executive Order 14178 (E.O. 14178), Strengthening American Leadership in Digital Financial Technology, “the Trump Administration supports the ability of lawful users of digital assets to privately transact on a public blockchain.” ^[10] The report also acknowledged that although illicit actors “use mixers to obfuscate and launder funds . . . lawful users of digital assets may leverage mixers to enable financial privacy when transacting through public blockchains.” ^[11] The report recommended that Treasury should consider next steps regarding its proposed rulemaking concerning CVC mixing.^[12]

FinCEN is withdrawing its finding that international CVC Mixing is a class of transactions of primary laundering concern, and the proposed rule, published on October 23, 2023, seeking to impose special measure one regarding international CVC Mixing. While FinCEN maintains that illicit actors continue to use mixers and other tools and methods to hinder law enforcement investigations, this withdrawal is informed by the concerns from commentors that the expansive definition of CVC mixing in the proposed rule could have a chilling effect on legitimate activity and place a large reporting burden on covered financial institutions. However, FinCEN will continue to monitor activity involving CVC mixers for indicia of money laundering, terrorist financing, or other illicit finance activity, and may take appropriate steps in the future to mitigate any such activity.

91 FR 63513