The US Treasury Department’s Financial Crimes Enforcement Network and the Federal Reserve have withdrawn a proposal to lower the reporting and recordkeeping threshold for cross-border transfers from $3,000 to $250, leaving existing requirements unchanged.
Summary
- FinCEN and the Federal Reserve have withdrawn their 2020 proposal to lower the reporting threshold for international transfers from $3,000 to $250, with the withdrawal taking effect on Nov. 9.
- The agencies cited changes in the digital asset industry and regulatory environment since 2020, while leaving open the possibility of introducing separate rules after further public consultation.
- The proposal had drawn nearly 3,000 public comments, including objections over financial privacy, compliance costs and the amount of personal information crypto businesses would have been required to collect.
- DeFi Education Fund policy lead Gavin Zavatone welcomed the withdrawal, arguing that the proposed requirements would have placed unnecessary data collection burdens on cryptocurrency users and businesses.
According to a joint withdrawal notice filed by the agencies, the decision will take effect on Nov. 9, ending a rulemaking process that began in October 2020 and would have brought significantly more cryptocurrency transactions under the Bank Secrecy Act’s information-sharing requirements.
The agencies cited the time that had passed since the original proposal, along with changes in the digital asset industry and its regulatory environment, as reasons for abandoning the planned amendments.
The existing $3,000 threshold will continue to apply to qualifying transfers handled by banks and other covered financial institutions, including cryptocurrency businesses subject to FinCEN’s money transmission rules.
Why did FinCEN withdraw the $250 crypto Travel Rule proposal?
The original proposal, published in October 2020, sought to amend the Bank Secrecy Act’s recordkeeping and Travel Rule requirements for transfers that begin or end outside the United States.
Under the proposed changes, financial institutions would have been required to collect and retain identifying information for qualifying international transfers worth $250 or more, compared with the existing $3,000 threshold.
Domestic transfers would have retained the higher threshold.
The agencies had proposed explicitly bringing convertible virtual currencies and digital assets with legal tender characteristics into the regulatory language, removing uncertainty about their treatment under the existing framework.
For cryptocurrency exchanges and custodians, the changes would have meant handling customer information for a much larger number of transactions, including smaller international payments that currently fall below the threshold.
The proposal attracted nearly 3,000 public comments, with several respondents questioning whether the additional information collection was justified by the expected benefits to anti-money laundering enforcement.
Some commenters raised concerns about financial privacy and potential Fourth Amendment implications, while others argued that the agencies had not provided sufficient evidence to support lowering the threshold.
In withdrawing the proposal, FinCEN and the Fed acknowledged that the regulatory environment had changed considerably since 2020.
The agencies left open the possibility of revisiting the requirements through separate rulemaking proceedings, particularly in light of recent stablecoin legislation and changes in federal digital asset policy. Any future proposal would be subject to another opportunity for public comment.
Gavin Zavatone, policy lead at the DeFi Education Fund and executive director at Defend DeFi, welcomed the withdrawal, arguing that the proposed requirements would have placed unnecessary burdens on cryptocurrency users.
“Americans shouldn’t have to hand over their names, addresses, and account details just because they chose to move value on a blockchain,” Zavatone wrote on X.
He argued that the decision would protect everyday users from “needless data collection” while allowing developers to continue building financial products in the United States.
Crypto industry welcomes withdrawal over privacy concerns
Gavin Zavatone, policy lead at the DeFi Education Fund and executive director at Defend DeFi, welcomed the withdrawal, arguing that the proposed requirements would have placed unnecessary burdens on cryptocurrency users and businesses.
“Americans shouldn’t have to hand over their names, addresses, and account details just because they chose to move value on a blockchain,” Zavatone wrote in commentary on X.
He argued that requiring businesses to collect more personal information could expose users to additional privacy risks, particularly when blockchain transactions can be traced through publicly available records.
The Blockchain Association had raised similar objections in a November 2020 comment letter, warning that the proposal could impose substantial compliance costs on smaller cryptocurrency businesses.
The association argued that determining whether a cryptocurrency transfer involved a foreign counterparty could be difficult, potentially forcing businesses to apply the lower threshold to transactions whose international status could not be established.
Zavatone described the withdrawal as a positive decision for both consumers and developers, saying it would allow businesses to continue developing financial products without the additional data collection requirements contemplated in the proposal.
US crypto Travel Rule threshold remains at $3,000
The Travel Rule requires covered financial institutions to collect and transmit identifying information about senders and recipients when processing qualifying transfers.
As crypto.news previously explained, the requirements apply to regulated cryptocurrency service providers, although thresholds and implementation rules differ considerably between jurisdictions.
The latest US decision follows an October withdrawal of separate FinCEN proposals concerning unhosted cryptocurrency wallets and transactions involving mixing services.
Other jurisdictions have continued pursuing stricter requirements. South Korea removed its domestic threshold in August, requiring registered virtual asset service providers to share identifying information regardless of the transfer amount.
The US withdrawal notice leaves the agencies free to introduce new proposals through future rulemaking proceedings, with additional public consultation required before any comparable amendments are adopted.
What does the withdrawal mean for the crypto industry?
For US cryptocurrency exchanges, custodians and other covered service providers, the withdrawal means they will not have to prepare for the additional recordkeeping and information sharing requirements that would have followed from the proposed $250 threshold.
Businesses can continue operating under the existing framework, which generally requires covered institutions to collect and transmit certain customer information for qualifying transfers of $3,000 or more.
Smaller cryptocurrency transfers will therefore not become subject to the proposed lower threshold, although exchanges must still comply with existing anti money laundering and customer identification requirements.
The decision does not remove the Travel Rule from cryptocurrency transactions or change the obligations that already apply to regulated businesses.
For companies operating internationally, compliance requirements will continue to depend on the jurisdictions involved, as other countries have adopted different thresholds and information sharing standards.
FinCEN and the Federal Reserve have left open the possibility of proposing new requirements in the future, particularly as US regulations concerning stablecoins and digital assets continue to develop.
Any such changes would require a new rulemaking process and another opportunity for public comment.
