FinCEN and Fed Withdraw Crypto Travel Rule Proposal

Two US regulators have pulled a proposed rule that would have applied so-called travel rule obligations to digital-asset transfers. FinCEN and the Federal Reserve announced the withdrawal, closing out a rulemaking that had lingered for years without being finalized.

The travel rule is a long-standing anti-money-laundering concept: financial institutions that send funds on behalf of customers must pass along identifying information about both sides of a transaction to the receiving institution. It traces back to the Bank Secrecy Act and to international standards set by the Financial Action Task Force.

Extending that framework to crypto has been contentious. Industry participants argued that the original proposal would have been hard to operate, particularly for transfers involving self-hosted wallets, where no intermediary exists to collect or transmit counterparty data. Compliance teams also warned about recordkeeping burdens and privacy exposure.

The withdrawal removes, at least for now, a pending compliance obligation for banks and digital-asset businesses, and it points to a lighter regulatory posture toward the sector. The underlying statutory requirements have not disappeared, however, and firms are still expected to meet existing anti-money-laundering obligations.