US Treasury Withdraws Controversial Crypto ‘Travel Rule’ Proposal

travel rule proposal — The U.S. Department of the Treasury has withdrawn a proposed rule that would have significantly expanded surveillance requirements for cryptocurrency transactions under the so-called ‘travel rule’.

The now-withdrawn proposal sought to extend existing Bank Secrecy Act regulations, which mandate that financial institutions collect and share sender and recipient information for certain transactions, to a broader range of cryptocurrency actors. The move had drawn criticism from industry participants who argued it would impose onerous compliance burdens.

By formally withdrawing the proposal, the Treasury’s Financial Crimes Enforcement Network (FinCEN) has halted this specific regulatory push. The decision represents a notable shift for an agency that has been actively exploring ways to apply traditional financial surveillance frameworks to the digital asset ecosystem.

The withdrawal does not affect the existing travel rule requirements that already apply to banks and money services businesses, including many crypto exchanges. However, it temporarily alleviates concerns about a more expansive regulatory regime for decentralized protocols and other non-custodial services.