U.S. Treasury withdraws crypto travel rule proposal for lower-value transfers

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U.S. Treasury drops crypto travel rule

Highlights

FinCEN and the Federal Reserve Board withdrew the 2020 proposal to lower the crypto Travel Rule transaction reporting threshold from $3,000 to $250, citing outdated context.
The withdrawal avoids expanded Bank Secrecy Act surveillance requirements, previously opposed by crypto advocacy groups for increasing compliance burdens on routine transactions.
Coin Center and Crypto Council for Innovation welcomed the decision, noting the move follows the rollback of another self-hosted wallet proposal last month.

Withdrawal resets cross-border crypto reporting plan

As reported by The Block, citing FinCEN in a filing, the Financial Crimes Enforcement Network and the Federal Reserve Board of Governors rescinded the proposed "Travel Rule" change on Friday after concluding that the measure had become outdated. The agencies said more than five years had passed since the proposal was introduced, the convertible virtual currency market had evolved, and further public input would help shape any future amendments.

The proposal, first introduced in 2020, would have required financial institutions to collect information on transactions worth $250 or more, cutting the threshold from $3,000. At the time, FinCEN had argued that illicit actors were increasingly using smaller transactions to move funds, prompting the push for broader recordkeeping and reporting requirements.

Industry groups say compliance burden is avoided

Crypto advocacy groups had opposed the lower threshold, arguing that it would pull more routine transactions into what they described as warrantless financial surveillance. Coin Center said in a Friday blog post that it welcomed the withdrawal, adding that the decision, alongside the rollback of another proposal affecting self-hosted wallets last month, closes out several pending measures that would have expanded Bank Secrecy Act surveillance requirements.

Crypto Council for Innovation CEO Ji Hun Kim also backed the decision in a statement, calling the withdrawal the right move. He said the proposal had stalled for years for good reason and argued that lowering the threshold for cross-border transfers from $3,000 to $250 would have placed an undue burden on institutions.

Our earlier report on the Federal Reserve’s policy messaging debate explained how disagreements over how openly officials should communicate were influencing rate-hike expectations ahead of the next meeting. We noted that frequent public remarks from policymakers helped temper bets on further tightening even as inflation data kept the outlook uncertain.

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