Federal Register / Vol. 88, No. 203 / Monday, October 23, 2023 / Proposed Rules 72701 

1On October 26, 2001, the President signed into 

law the Uniting and Strengthening America by 

Providing Appropriate Tools Required to Intercept 

and Obstruct Terrorism Act of 2001, Public Law 

107–56 (USA PATRIOT Act). Title III of the USA 

PATRIOT Act amended the anti-money laundering 

(AML) provisions of the Bank Secrecy Act (BSA) to 

promote the prevention, detection, and prosecution 

of international money laundering and the 

financing of terrorism. The BSA, as amended, is the 

popular name for a collection of statutory 

authorities that FinCEN administers that is codified 

at 12 U.S.C. 1829b, 1951–1960 and 31 U.S.C. 5311– 

5314, 5316–5336, and includes other authorities 

reflected in notes thereto. Regulations 

implementing the BSA appear at 31 CFR Chapter 

X. 

2Pursuant to Treasury Order 180–01 (Jan. 14, 

2020), the authority of the Secretary to administer 

the BSA, including, but not limited to, 31 U.S.C. 

5318A, has been delegated to the Director of 

FinCEN. 

3 31 U.S.C. 5318A(b)(1). 

4 31 U.S.C. 5318A(b)(2)–(b)(4). 

5 31 U.S.C. 5318A(b)(5). 

6 31 U.S.C. 5318A(c)(1). 

7 31 U.S.C. 5318A(c)(2)(B). 

8 31 U.S.C. 5318A(a)(4)(A). 

List of Subjects in 30 CFR Part 926 

State regulatory program approval, 

State-Federal cooperative agreement, 

Required program amendments. 

David A. Berry, 

Regional Director, Unified Regions 5, 7–11. 

[FR Doc. 2023–23034 Filed 10–20–23; 8:45 am] 

BILLING CODE 4310–05–P 

DEPARTMENT OF THE TREASURY 

Financial Crimes Enforcement Network 

31 CFR Part 1010 

RIN 1506–AB64 

Proposal of Special Measure 

Regarding Convertible Virtual 

Currency Mixing, as a Class of 

Transactions of Primary Money 

Laundering Concern 

AGENCY: Financial Crimes Enforcement 

Network (FinCEN), Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: FinCEN is issuing a notice of 

proposed rulemaking (NPRM), pursuant 

to section 311 of the USA PATRIOT Act, 

that proposes requiring domestic 

financial institutions and domestic 

financial agencies to implement certain 

recordkeeping and reporting 

requirements relating to transactions 

involving convertible virtual currency 

(CVC) mixing. 

DATES: Written comments on the notice 

of proposed rulemaking must be 

submitted on or before January 22, 2024. 

ADDRESSES: Comments must be 

submitted by one of the following 

methods: 

• Federal E-rulemaking Portal: 

https://www.regulations.gov. Follow the 

instructions for submitting comments. 

Refer to Docket Number FINCEN–2023– 

0016 in the submission. 

• Mail: Financial Crimes Enforcement 

Network, P.O. Box 39, Vienna, VA 

22183. Refer to Docket Number 

FINCEN–2023–0016 in the submission. 

Please submit comments by one 

method only, and note that comments 

submitted in responses to this NPRM 

will become a matter of public record. 

FOR FURTHER INFORMATION CONTACT: The 

FinCEN Regulatory Support Section at 

1–800–767–2825 or electronically at 

frc@fincen.gov. 

SUPPLEMENTARY INFORMATION: 

I. Statutory Provisions 

Section 311 of the USA PATRIOT Act 

(section 311), codified at 31 U.S.C. 

5318A, grants the Secretary of the 

Treasury (Secretary) authority, upon 

finding that reasonable grounds exist for 

concluding that one or more classes of 

transactions within or involving a 

jurisdiction outside of the United States 

is of primary money laundering 

concern, to require domestic financial 

institutions and domestic financial 

agencies to take certain ‘‘special 

measures.’’ 1 The authority of the 

Secretary to administer section 311 and 

the Bank Secrecy Act (BSA) has been 

delegated to FinCEN.2

The five special measures set out in 

section 311 are prophylactic safeguards 

that may be employed to defend the 

United States financial system from 

money laundering and terrorist 

financing risks. The Secretary may 

impose one or more of these special 

measures in order to protect the U.S. 

financial system from such threats. 

Through special measure one, the 

Secretary may require domestic 

financial institutions and domestic 

financial agencies to maintain records, 

file reports, or both, concerning the 

aggregate amount of transactions or 

individual transactions.3 Through 

special measures two through four, the 

Secretary may impose additional 

recordkeeping, information collection, 

and reporting requirements on covered 

domestic financial institutions and 

domestic financial agencies.4 Through 

special measure five, the Secretary may 

prohibit, or impose conditions upon, the 

opening or maintaining in the United 

States of correspondent or payablethrough accounts for or on behalf of a 

foreign banking institution, if the class 

of transactions found to be of primary 

money laundering concern may be 

conducted through such correspondent 

account or payable-through account.5

Before making a finding that 

reasonable grounds exist for concluding 

that a class of transactions is of primary 

money laundering concern, the 

Secretary is required to consult with 

both the Secretary of State and the 

Attorney General.6 The Secretary is also 

required to consider such information as 

the Secretary determines to be relevant, 

including the following potentially 

relevant factors: 

• The extent to which such class of 

transactions is used to facilitate or 

promote money laundering in or 

through a jurisdiction outside the 

United States, including any money 

laundering activity by organized 

criminal groups, international terrorists, 

or entities involved in the proliferation 

of weapons of mass destruction (WMD) 

or missiles; 

• The extent to which such class of 

transactions is used for legitimate 

business purposes in the jurisdiction; 

and 

• The extent to which such action is 

sufficient to ensure that the purposes of 

section 311 are fulfilled and to guard 

against international money laundering 

and other financial crimes.7

Upon finding that a class of 

transactions is of primary money 

laundering concern, the Secretary may 

require covered financial institutions to 

take one or more special measures. In 

selecting one or more special measures, 

the Secretary ‘‘shall consult with the 

Chairman of the Board of Governors of 

the Federal Reserve System, any other 

appropriate Federal banking agency (as 

defined in section 3 of the Federal 

Deposit Insurance Act), the Secretary of 

State, the Securities and Exchange 

Commission, the Commodity Futures 

Trading Commission, the National 

Credit Union Administration Board, and 

in the sole discretion of the Secretary, 

such other agencies and interested 

parties as the Secretary may find 

appropriate.’’ 8

In addition, the Secretary is required 

to consider the following factors when 

selecting special measures: 

• Whether similar action has been or 

is being taken by other nations or 

multilateral groups; 

• Whether the imposition of any 

particular special measure would create 

a significant competitive disadvantage, 

including any undue cost or burden 

associated with compliance, for 

financial institutions organized or 

licensed in the United States; 

• The extent to which the action or 

the timing of the action would have a 

significant adverse systemic impact on 

the international payment, clearance, 

and settlement system, or on legitimate 


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72702 Federal Register / Vol. 88, No. 203 / Monday, October 23, 2023 / Proposed Rules 

9 31 U.S.C. 5318A(a)(4)(B). 

10For the purposes of this NPRM, the term ‘‘CVC’’ 

is defined as a medium of exchange that either has 

an equivalent value as currency or acts as a 

substitute for currency, but lacks legal tender status. 

Although Bitcoin has legal tender status in at least 

two jurisdictions, the term ‘‘CVC’’ includes Bitcoin. 

11A more detailed definition of this term is 

provided in Section IX of this NPRM. 

12Fiat currency refers to traditional currency 

such as the U.S. dollar. 

13Notwithstanding the use of ‘‘attack’’ as a legal 

term of art in certain settings, FinCEN here and 

throughout intends only the colloquial meaning of 

the term. 

14A more detailed examination of analysis is 

below in Section IV.A.3 of this NPRM. 

15White House, Executive Order on Ensuring 

Responsible Development of Digital Assets Fact 

Sheet, Mar. 9, 2022, available at https://

www.whitehouse.gov/briefing-room/statementsreleases/2022/03/09/fact-sheet-president-biden-tosign-executive-order-on-ensuring-responsibleinnovation-in-digital-assets/. 

16See, e.g., FinCEN, FIN–2019–G001, Application 

of FinCEN’s Regulations to Certain Business Models 

Involving Convertible Virtual Currencies, May 9, 

2019, available at https://www.fincen.gov/sites/ 

default/files/2019-05/FinCEN%20Guidance

%20CVC%20FINAL%20508.pdf (FinCEN 2019 CVC 

Guidance). 

17FinCEN notes that CVC or ‘‘virtual currency’’ 

by itself does not meet the definition of a 

‘‘currency’’ under 31 CFR 1010.100(m). 

Additionally, potential characterization of CVC as 

currency, securities, commodities, or derivatives for 

the purposes of any other legal regime, such as the 

Federal securities laws or the Commodity Exchange 

Act, is outside the scope of this proposed rule. 

However, as described in the FinCEN 2019 CVC 

Guidance, if assets that other regulatory frameworks 

defined as commodities, securities, or futures 

contracts were to be specifically issued or later 

repurposed to serve as a currency substitute, then 

the asset itself could be a type of value that 

substitutes for currency and be defined as CVC for 

the purposes of this proposed rule, in addition to 

being subject to other applicable regulatory 

frameworks. 

18Blockchain refers to a type of distributed ledger 

technology (DLT) that cryptographically signs 

transactions that are grouped into blocks. For more 

information on blockchain, see National Institute of 

Science and Technology, Blockchain, available at 

https://www.nist.gov/blockchain. 

19See U.S. Department of the Treasury 

(Treasury), DeFi Risk Assessment, Apr. 2023, at p. 

business activities involving the 

particular jurisdiction, institution, class 

of transactions, or type of account; and 

• The effect of the action on United 

States national security and foreign 

policy.9

II. Summary of NPRM 

Convertible Virtual Currency (CVC) 

mixing entails the facilitation of CVC 10

transactions in a manner that obfuscates 

the source, destination, or amount 

involved in one or more transactions.11

Because CVC mixing is intended to 

make CVC transactions untraceable and 

anonymous, CVC mixing is ripe for 

abuse by, and frequently used by, illicit 

foreign actors that threaten the national 

security of the United States and the 

U.S. financial system. By obscuring the 

connection between the CVC wallet 

addresses used to receive illicit CVC 

proceeds and the CVC wallet addresses 

from which illicit CVC is transferred to 

CVC-to-fiat 12 currency exchangers, 

other CVC users, or CVC exchanges, 

CVC mixing transactions can play a 

central role in facilitating the laundering 

of CVC derived from a variety of illicit 

activity. 

Indeed, CVC mixing transactions are 

frequently used by criminals and state 

actors to facilitate a range of illicit 

activity, including, but not limited to, 

money laundering, sanctions evasion 

and WMD proliferation by the 

Democratic People’s Republic of Korea 

(DPRK or North Korea), Russianassociated ransomware attacks,13 and 

illicit darknet markets. Further, a recent 

assessment by FinCEN determined that 

the percentage of CVC transactions 

processed by CVC mixers that originated 

from likely illicit sources is 

increasing.14 CVC mixing often involves 

foreign jurisdictions because persons 

who facilitate or engage in CVC mixing 

transactions are often located abroad, 

including notable recent CVC mixing 

activity involving DPRK-affiliated threat 

actors, Russian ransomware actors, and 

buyers and sellers on Russian darknet 

markets. 

Accordingly, because CVC mixing 

provides foreign illicit actors with 

enhanced anonymity that allows them 

to launder their illicit proceeds, FinCEN 

assesses that transactions involving CVC 

mixing within or involving a 

jurisdiction outside the United States 

are of primary money laundering 

concern, and, having undertaken the 

necessary consultations, also finds that 

imposing additional recordkeeping and 

reporting requirements would assist in 

mitigating the risks posed by such 

transactions. Such reporting will assist 

law enforcement with identifying the 

perpetrators behind illicit transactions 

and preventing, investigating, and 

prosecuting illegal activity, as well as 

rendering such transactions—through 

increased transparency—less attractive 

and useful to illicit actors. This NPRM 

(1) sets forth FinCEN’s finding that 

transactions involving CVC mixing 

within or involving jurisdictions outside 

the United States are a class of 

transactions that are of primary money 

laundering concern; and (2) proposes, 

under special measure one, requiring 

covered financial institutions to 

implement certain recordkeeping and 

reporting requirements on transactions 

that covered financial institutions know, 

suspect, or have reason to suspect 

involve CVC mixing within or involving 

jurisdictions outside the United States. 

III. Background 

Although the United States supports 

innovation and advances in digital and 

distributed ledger technology for 

financial services, it must also consider 

the substantial implications that such 

technology has for national security and 

mitigate the attendant risks for 

consumers, businesses, national 

security, and the integrity of the broader 

U.S. financial system.15 CVC can be 

used for legitimate and innovative 

purposes. However, it is not without its 

risks and, in particular, the use of CVC 

to anonymize illicit activity undermines 

the legitimate and innovative uses of 

CVC. 

A. CVC Mixing and Its Mechanisms 

The term ‘‘virtual currency’’ refers to 

a medium of exchange that can operate 

like currency but does not have all the 

attributes of ‘‘real,’’ or fiat, currency. 

CVC is a type of virtual currency that 

either has an equivalent value as 

currency or acts as a substitute for 

currency and is therefore a type of 

‘‘value that substitutes for currency.’’ 

The label applies to any particular type 

of CVC, such as ‘‘digital currency,’’ 

‘‘cryptocurrency,’’ ‘‘cryptoasset,’’ and 

‘‘digital asset.’’ 16 17

The public nature of most CVC 

blockchains,18 which provide a 

permanent, recorded history of all 

previous transactions, make it possible 

to know someone’s entire financial 

history on the blockchain. Anonymity 

enhancing tools, including ‘‘mixers,’’ 

are used to avoid this. To provide 

enhanced anonymity, CVC mixers 

provide a service—CVC mixing—that is 

intended to obfuscate transactional 

information, allowing users to obscure 

their connection to the CVC. 

There are a number of ways to 

conduct CVC mixing transactions—one 

of the most common of which is the use 

of CVC mixers. CVC mixers can 

accomplish this through a variety of 

mechanisms, including: pooling or 

aggregating CVC from multiple 

individuals, wallets, or accounts into a 

single transaction or transactions; 

splitting an amount into multiple 

amounts and transmitting the CVC as a 

series of smaller independent 

transactions; or leveraging code to 

coordinate, manage, or manipulate the 

structure of the transaction; among other 

methods. Through such mechanisms, 

CVC mixers can functionally simulate a 

customer depositing funds from an 

anonymous account into a financial 

institution’s omnibus account and 

withdrawing funds into a separate 

anonymous account.19 For example, a 


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Federal Register / Vol. 88, No. 203 / Monday, October 23, 2023 / Proposed Rules 72703 

19, available at https://home.treasury.gov/system/ 

files/136/DeFi-Risk-Full-Review.pdf (Treasury April 

2023 Defi Risk Assessment). 

20FinCEN, Financial Trend Analysis, 

Ransomware Trends in Bank Secrecy Act Data 

Between January 2021 and June 2021, Oct. 15, 2021, 

at p. 13, available at https://www.fincen.gov/sites/ 

default/files/2021-10/Financial%20

Trend%20Analysis_

Ransomware%20508%20FINAL.pdf (FinCEN 

October 2021 FTA). 

21Users employ digital wallets to hold their CVC. 

These wallets appear on the blockchain as a string 

of alphanumeric characters, but can be created 

using software at will, and are not directly tied to 

any individual person’s identity. 

22See Treasury April 2023 Defi Risk Assessment, 

at pp. 3–4, 28. 

23 ‘‘Darknet’’ is a term used to refer to networks 

that are only accessible through the use of specific 

software or network configurations. Darknet content 

is not indexed by web search engines, and is often 

accessed via anonymized, encrypted systems like 

the software The Onion Router (TOR). Darknet 

markets are online markets only accessible with the 

use of software like TOR, and because they are not 

indexed, can only be found if the domain name and 

URL are already known to the user. As a result of 

the inherent anonymity of the darknet 

infrastructure, darknets facilitate criminal activity 

because of the difficulty involved for law 

enforcement in identifying users, infrastructure, 

and even domains associated with the sale of illicit 

goods and services. FinCEN’s August 2021 publicly 

available assessment of a civil money penalty 

against an exchange noted that darknet 

marketplaces actively promote CVC mixers as the 

primary method for obfuscating CVC transactions. 

24United Nations, UN Panel of Experts Letter, S/ 

2023/171, Mar. 7, 2023, at p. 4, available at https:// 

documents-dds-ny.un.org/doc/UNDOC/GEN/N23/ 

037/94/PDF/N2303794.pdf?OpenElement (UN 

March 2023 Experts Letter); see Wall Street Journal, 

North Korea Suspected of Plundering Crypto to 

Fund Weapons Programs, July 1, 2022, available at 

https://www.wsj.com/articles/north-koreasuspected-of-plundering-crypto-to-fund-weaponsprograms-11656667802. 

25Office of Foreign Assets Control (OFAC), U.S. 

Treasury issues First Ever Sanctions on Virtual 

Currency Mixer, Targets DPRK Cyber Threats, May 

6, 2022, available at https://home.treasury.gov/ 

news/press-releases/jy0768 (U.S. Treasury May 

2022 Press Release); see Elliptic, North Korea’s 

Lazarus Group Identified as Exploiters Behind $540 

Million Ronin Bridge Heist, Apr. 14, 2022, available 

at https://www.elliptic.co/blog/540-million-stolenfrom-the-ronin-defi-bridge. 

26OFAC, Treasury Designates DPRK Weapons 

Representative, Nov. 8, 2022, available at https://

home.treasury.gov/news/press-releases/jy1087 (U.S. 

Treasury November 2022 Press Release). 

criminal actor could take the illicit 

proceeds of their crime, send the CVC 

to a CVC mixer, and then on to an 

account they hold at a virtual asset 

service provider (VASP). At this point, 

the VASP would take custody of the 

illicitly sourced CVC, thereby allowing 

illicit funds to enter their omnibus 

account, all while being unaware of the 

origin of the illicit CVC. The critical 

challenge is that CVC mixing services 

rarely, if ever, provide to regulators or 

law enforcement the resulting 

transactional chain or information 

collected as part of the transaction. 

CVC mixing does not, however, 

wholly rely on the use of CVC mixers. 

There are certain methods that CVC 

users—and CVC mixers—often employ 

in an effort to obfuscate their 

transactions. These methods include: 

a. Pooling or aggregating CVC from 

multiple persons, wallets, addresses, or 

accounts: This method involves 

combining CVC from two or more 

persons into a single wallet or smart 

contract and, by pooling or aggregating 

that CVC, obfuscating the identity of 

both parties to the transaction by 

decreasing the probability of 

determining both intended persons for 

each unique transaction. 

b. Splitting CVC for transmittal and 

transmitting the CVC through a series of 

independent transactions: This method 

involves splitting a single transaction 

from sender to receiver into multiple, 

smaller transactions, in a manner 

similar to structuring, to make 

transactions blend in with other, 

unrelated transactions on the 

blockchain occurring at the same time 

so as to not stand out, thereby 

decreasing the probability of 

determining both intended persons for 

each unique transaction. 

c. Using programmatic or algorithmic 

code to coordinate, manage, or 

manipulate the structure of a 

transaction: This method involves the 

use of software that coordinates two or 

more persons’ transactions together in 

order to obfuscate the individual unique 

transactions by providing multiple 

potential outputs from a coordinated 

input, decreasing the probability of 

determining both intended persons for 

each unique transaction. 

d. Creating and using single-use 

wallets, addresses, or accounts and 

sending CVC through these wallets, 

addresses, or accounts in a series of 

transactions: This method involves the 

use of single-use wallets, addresses, or 

accounts—colloquially known as a 

‘‘peel chain’’—in a series of unnatural 

transactions that have the purpose or 

effect of obfuscating the source and 

destination of funds by volumetrically 

increasing the number of involved 

transactions, thereby decreasing the 

probability of determining both 

intended persons for each unique 

transaction. 

e. Exchanging between types of CVC, 

or other digital assets: This method 

involves exchanges between two or 

more types of CVC or other digital 

assets—colloquially referred to as 

‘‘chain hopping’’—to facilitate 

transaction obfuscation by converting 

one CVC into a different CVC at least 

once before moving the funds to another 

service or platform thereby decreasing 

the probability of determining both 

intended persons for each unique 

transaction.20

f. Facilitating user-initiated delays in 

transactional activity: This method 

involves the use of software, programs, 

or other technology that 

programmatically carry out predetermined timed-delay of transactions 

by delaying the output of a transaction 

in order to make that transaction appear 

to be unrelated to transactional input, 

thereby decreasing the probability of 

determining both intended persons for 

each unique transaction. 

B. Use of CVC Mixing by Illicit Foreign 

Actors 

Illicit actors use enhanced anonymity 

on the blockchain to avoid detection by 

authorities as they launder their illicit 

proceeds. By obfuscating identity and 

preventing the attribution of ownership 

of CVC,21 CVC mixing allows illicit 

actors, such as cyber threat actors 

carrying out ransomware attacks or 

cyber heists, to launder their CVC and 

convert it into fiat currency, minimizing 

the risk of being detected by involved 

financial institutions, including VASPs, 

or relevant authorities. Because wallet 

addresses are pseudonymous and CVC 

mixing severs the connection between 

the identity of users sending and 

receiving CVC, illicit actors are able to 

exploit vulnerabilities in anti-money 

laundering and countering the financing 

of terrorism (AML/CFT) regulatory 

frameworks,22 threatening the 

effectiveness of rules which require 

financial institutions to, among other 

things, know the identity of their 

customers and report suspicious activity 

to FinCEN. 

Over the past few years, Treasury has 

monitored, and expressed concern with, 

the increasing use of CVC mixing by 

illicit actors, including North Koreaaffiliated cyber threat actors, 

ransomware actors, and darknet 

market 23 participants, to transfer and 

launder their illicit proceeds. In 

particular, the DPRK—already under 

pressure from robust United States, 

European Union, United Kingdom, and 

United Nations sanctions—relies upon 

CVC mixing to launder the proceeds of 

cyber heists in order to finance the 

DPRK’s WMD program.24 The Axie 

Infinity Ronin Bridge (Axie Infinity) 

heist—committed in March 2022, worth 

almost $620 million and carried out by 

the DPRK-controlled Lazarus Group— 

remains, for instance, the largest cyber 

heist to date,25 and made high profile 

use of at least two mixers to launder the 

proceeds of the theft—Blender.io and 

Tornado Cash.26


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27See FinCEN October 2021 FTA, at p. 17. 

28U.S. Department of Justice (DOJ), Justice 

Department Investigation Leads To Shutdown Of 

Largest Online Darknet Marketplace, Apr. 5, 2022, 

available at https://www.justice.gov/usao-ndca/pr/ 

justice-department-investigation-leads-shutdownlargest-online-darknet-marketplace. 

29FinCEN, First Bitcoin ‘‘Mixer’’ Penalized by 

FinCEN for Violating Anti-Money Laundering Laws, 

Oct. 19, 2020, available at https://www.fincen.gov/ 

news/news-releases/first-bitcoin-mixer-penalizedfincen-violating-anti-money-laundering-laws (First 

Bitcoin ‘‘Mixer’’ Penalized by FinCEN, October 19, 

2020); DOJ, Ohio Resident charged operating 

darknet based bitcoin mixer laundered over 300 

million, Feb. 13, 2020, available at https://

www.justice.gov/opa/pr/ohio-resident-chargedoperating-darknet-based-bitcoin-mixer-whichlaundered-over-300-million; DOJ, Justice 

Department Investigation leads to takedown of 

Darknet cryptocurrency mixer processed over $3 

billion of unlawful transactions, Mar. 15, 2023, 

available at https://www.justice.gov/opa/pr/justicedepartment-investigation-leads-takedown-darknetcryptocurrency-mixer-processed-over-3 (DOJ March 

2023 Press Release); U.S. Treasury November 2022 

Press Release. 

30See DOJ March 2023 Press Release. 31 DOJ, Four Defendants Charged with Conspiring 

to Provide Cryptocurrency to ISIS, Dec. 14, 2022, 

available at https://www.justice.gov/usao-edny/pr/ 

four-defendants-charged-conspiring-providecryptocurrency-isis; TRM Labs, Terrorist Financing 

Six Crypto Related Trends to Watch in 2022, Feb. 

16, 2023, available at https://www.trmlabs.com/ 

post/terrorist-financing-six-crypto-related-trends-towatch-in-2023. 

32Chainalysis, Russian Cybercriminals Drive 

Significant Ransomware and Cryptocurrency-based 

Money Laundering Activity, Feb. 14, 2022, available 

at https://www.chainalysis.com/blog/2022-cryptocrime-report-preview-russia-ransomware-moneylaundering/. 

33 31 CFR 1010.100(ff). 

CVC mixing is also commonly used to 

obfuscate the source of CVC obtained 

through other illicit activities, such as 

ransomware attacks and the use and 

operation of darknet markets. For 

example, between January 2021 and 

June 2021, the top 10 most common 

ransomware variants reported in 

suspicious activity report (SAR) data, 

including several Russian-affiliated 

variants, sent approximately $35.2 

million to CVC mixers and $252 million 

to darknet markets.27 Indeed, darknet 

marketplaces actively promote CVC 

mixers as the primary method for 

obfuscating related transactions, and, 

indeed, multiple CVC mixers 

historically interacted with Hydra, the 

former Russian darknet market that 

accounted for approximately 80 percent 

of all darknet market CVC transactions 

in 2021 before being shut down by 

United States and German law 

enforcement.28 Because darknet 

marketplaces are fundamentally illicit 

in nature, FinCEN assesses that illicit 

actors using darknet markets to 

purchase or sell illicit goods favor the 

ability to reduce the odds of being 

identified and leverage CVC mixing to 

enhance anonymity to that end. 

Similarly, ransomware actors also prefer 

an opportunity to successfully launder 

their illicit funds by using CVC mixing 

to enhance anonymity. 

The multiple U.S. Government 

actions against CVC mixers, often in 

coordination with international 

partners, demonstrate that CVC mixing 

provides illicit actors with enhanced 

anonymity in CVC transactions, 

allowing them to more easily launder 

their illicit proceeds in CVC.29

IV. Finding That Transactions That

Involve CVC Mixing Within or

Involving a Jurisdiction Outside the

United States Are a Class of

Transactions of Primary Money

Laundering Concern

Pursuant to 31 U.S.C. 5318A(a)(1), 

FinCEN finds that reasonable grounds 

exist for concluding that transactions 

involving CVC mixing within or 

involving a jurisdiction outside the 

United States are a class of transactions 

that is of primary money laundering 

concern. In making this finding, FinCEN 

considered the following statutory 

factors: (1) the extent to which the class 

of transactions is used to facilitate or 

promote money laundering in or 

through a jurisdiction outside of the 

United States, including money 

laundering activity with connections to 

international terrorism, organized crime, 

and proliferation of WMDs and missiles; 

(2) the extent to which a class of

transactions is used for legitimate

business purposes; and (3) the extent to

which action by FinCEN would guard

against international money laundering

and other financial crimes.

A. The Extent to Which the Class of

Transactions Is Used To Facilitate or

Promote Money Laundering in or

Through a Jurisdiction Outside the

United States, Including Any Money

Laundering Activity by Organized

Criminal Groups, International

Terrorists, or Entities Involved in the

Proliferation of WMD and Missiles

FinCEN assesses that foreign CVC 

mixing transactions are used to facilitate 

or promote money laundering in or 

through jurisdictions outside the United 

States, including by organized criminal 

groups, international terrorists, or 

entities involved in the proliferation of 

WMD and missiles. FinCEN based this 

assessment on information available to 

the agency, including both public and 

non-public reporting, and after thorough 

consideration of each of the following 

factors: (1) that transactions involving 

CVC mixing often occur within, or 

involve, jurisdictions outside of the 

United States; (2) that CVC mixing is 

used to launder proceeds of large-scale 

CVC theft and heists, and support the 

proliferation of WMD, in particular, by 

the DPRK; and (3) that CVC mixing is 

similarly used by ransomware actors 

and darknet markets to launder illicit 

proceeds. 

1. CVC Mixing Transactions Often

Occur Within or Involve Jurisdictions

Outside the United States

CVC mixers conduct business with 

opaque operational structures and take 

steps to avoid the discovery of where 

they and their users are located. CVC 

mixers commonly obscure their 

locations, including (1) employing The 

Onion Router (TOR) to conceal the 

location of their servers; 30 (2) failing to 

register as a business in any jurisdiction; 

and (3) failing to maintain any activity 

logs. Based on public and non-public 

information, FinCEN assesses that CVC 

mixing activity often occurs within or 

involves numerous jurisdictions outside 

the United States and, indeed, 

throughout the world. The U.S. 

Department of Justice (DOJ) and open 

source reporting identified an increase 

in the use of CVC in terror finance, 

including by Hamas and the Islamic 

State of Iraq and Syria (ISIS), and the 

use of CVC mixers to obfuscate source 

of funds to protect the identity of their 

donors.31 In addition, FinCEN has 

identified the use of CVC mixing 

services as a prevalent money 

laundering typology for the top 10 

ransomware strains identified in BSA 

data from January 2021 to June 2021, 

and, notably, open source analysis of 

CVC payments indicates that up to 74 

percent of ransomware activity is 

associated with Russia.32

The global nature of the problem is 

further demonstrated by the fact that no 

CVC mixers are currently registered 

with FinCEN. CVC mixers are required 

to register with FinCEN if they do 

business as money transmitters wholly 

or in substantial part within the United 

States.33 To the extent foreign CVC 

mixers are operating beyond United 

States jurisdiction, they are not subject 

to U.S. regulations that require financial 

institutions to, among other things, 

know the identity of their customers 

and report suspicious activity to 

FinCEN. Nevertheless, FinCEN assesses 

that other forms of CVC mixing, that do 

not involve the use of CVC mixers, do 

occur within the United States. 

Recent U.S. and foreign enforcement 

actions also reflect CVC mixing 

transactions within or involving 

numerous foreign jurisdictions, 

including DPRK, Russia, Luxembourg, 


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34See U.S. Treasury May 2022 Press Release. 35See U.S. Treasury November 2022 Press 

Release. 36Federal Bureau of Investigation (FBI), FBI 

Statement of Attribution of Malicious Cyber Activity 

Posed by the Democratic People’s Republic of 

Korea, Apr. 14, 2022, available at https://

www.fbi.gov/news/pressrel/press-releases/fbistatement-on-attribution-of-malicious-cyberactivity-posed-by-the-democratic-peoples-republicof-korea. 37FBI, FBI Confirms Lazarus Group, APT 38 

Cyber Actors Responsible for Harmony’s Horizon 

Bridge Currency Theft, Jan. 23, 2023, available at 

https://www.fbi.gov/news/press-releases/fbiconfirms-lazarus-group-cyber-actors-responsiblefor-harmonys-horizon-bridge-currency-theft (FBI 

January 23, 2023 Press Release). 

38See Dutch Fiscal Information and Investigation 

Service, Arrest of suspected developer of Tornado 

Cash, Aug. 12, 2022, available at https://

www.fiod.nl/arrest-of-suspected-developer-oftornado-cash/; DOJ, Tornado Cash Founders 

Charged with Money Laundering and Sanctions 

Violations, Aug. 23, 2023, available at https://

www.justice.gov/usao-sdny/pr/tornado-cashfounders-charged-money-laundering-and-sanctionsviolations; OFAC, Treasury Designates Roman 

Semenov, Co-Founder of Sanctioned Virtual 

Currency Mixer Tornado Cash,Aug. 23, 2023, 

available at https://home.treasury.gov/news/pressreleases/jy1702; OFAC, Sanctions List Search, Aug. 

24, 2023, available at https://sanctionssearch.

ofac.treas.gov/Details.aspx?id=44718. 

39The European Union Agency for Law 

Enforcement Cooperation (Europol), Multi-million 

euro cryptocurrency laundering service Bestmixer.io 

taken down, May 22, 2019, available at https://

www.europol.europa.eu/media-press/newsroom/ 

news/multi-million-euro-cryptocurrencylaundering-service-bestmixerio-taken-down; DOJ 

March 2023 Press Release. 

40CoinDesk, Crypto.com’s Stolen Ether Being 

Mixed Through Tornado Cash (Updated May 11, 

2023), available at https://www.coindesk.com/

business/2022/01/18/cryptocoms-stolen-etherbeing-laundered-via-tornado-cash/; see Halborn, 

Explained: the Crypto.com Hack (January 2022), 

Jan. 24, 2022, available at https://halborn.com/

explained-the-crypto-com-hack-january-2022/ 

(accessed Nov. 15, 2022). 

41See U.S. Treasury November 2022 Press 

Release; Reuters, U.S. crypto firm Nomad hit by 

$190 million theft, Aug. 3, 2022, available at 

https://www.reuters.com/technology/us-crypto-firmnomad-hit-by-190-million-theft-2022-08-02/. 

42See Chainalysis, The Crypto Crime Report 

2023, available at https://go.chainalysis.com/2023- 

crypto-crime-report.html (The 2023 Crypto Crime 

Report). 

43See U.S. Treasury November 2022 Press 

Release; see also FinCEN, Imposition of Special 

Measure Against North Korea as a Jurisdiction of 

Primary Money Laundering Concern, 81 FR 78715, 

Nov. 9, 2016, available at https://www.fincen.gov/ 

sites/default/files/shared/2016-27049.pdf (FinCEN 

2016 Imposition of Special Measure Against North 

Korea). 

44See UN March 2023 Experts Letter, at p. 4. 

45Chainalysis, Crypto Money Laundering: Four 

Exchange Deposit Addresses Received Over $1 

Billion in Illicit Funds in 2022, Jan. 26, 2023, 

available at https://blog.chainalysis.com/reports/

crypto-money-laundering-2022/. (Crypto Money 

Laundering: Four Exchange). 

46Chainalysis, The 2022 Crypto Crime Report, 

Feb. 2022, available at https://go.chainalysis.com/ 

2022-crypto-crime-report.html (The 2022 Crypto 

Crime Report); see Chainalysis, North Korean 

Hackers Have Prolific Year as Their Unlaundered 

Cryptocurrency Holdings Reach All-time High, Jan. 

13, 2022, available at https://blog.chainalysis.com/ 

reports/north-korean-hackers-have-prolific-year-astheir-total-unlaundered-cryptocurrency-holdingsreach-all-time-high/. 

47See U.S. Treasury May 2022 Press Release. 

48See U.S. Treasury November 2022 Press 

Release. 

49See DOJ March 2023 Press Release. 

50According to open-source reporting, RAILGUN 

is headquartered in London, England. 

51FinCEN assesses that RAILGUN falls under the 

umbrella of CVC mixing, as defined by this NPRM, 

because it uses its privacy protocol to manipulate 

the structure of the transaction to appear as being 

sent from the RAILGUN contract address, thus 

obscuring the true originator. 

52See FBI January 23, 2023 Press Release. 

53FBI, FBI Identifies Cryptocurrency Funds 

Stolen by DPRK, Aug. 22, 2023, available at https:// 

www.fbi.gov/news/press-releases/fbi-identifiescryptocurrency-funds-stolen-by-dprk. 

54Elliptic, North Korea’s Lazarus Group likely 

responsible for $35 Million Atomic Crypto Theft, 

June 6, 2023, available at https://hub.elliptic.co/

analysis/north-korea-s-lazarus-group-likelyresponsible-for-35-million-atomic-crypto-theft/ 

#:∼:text=Elliptic’s%20analysis%20suggests

%20that%20North,with%20five%20million

%20users%20worldwide. 

the Netherlands, and Vietnam. Office of 

Foreign Assets Control (OFAC) actions 

in 2022, for instance, highlighted the 

links between the DPRK and CVC 

mixers Blender.io 34 and Tornado 

Cash 35—through their respective 

involvement in the Axie Infinity heist 36

in March 2022 and Tornado Cash’s 

involvement in the Harmony Horizon 

Bridge (Harmony) heist 37 in June 

2022.38 The coordinated international 

takedown of ChipMixer, a darknet CVC 

‘‘mixing’’ service operated by 

Vietnamese national Minh Quoˆc 

Nguyeˆn in Hanoi, Vietnam, by the DOJ 

and the German Federal Criminal Police 

(Bundeskriminalamt or BKA) on March 

15, 2023, and shutdown of Bestmixer.io 

and associated seizure of servers located 

in the Netherlands and Luxembourg by 

the Dutch Fiscal Information and 

Investigation Service (FIOD), in close 

cooperation with Europol and 

Luxembourg authorities on May 22, 

2019,39 similarly demonstrate the 

international character of CVC mixing 

transactions—spanning jurisdictions 

across Europe and Asia. 

2. CVC Mixing Is Used To Launder 

Proceeds of Large-Scale CVC Theft and 

Heists 

FinCEN assesses that CVC mixing is 

used to launder the proceeds of largescale CVC theft and heists by both state 

and non-state sponsored actors. 

Whether heists are carried out by state 

or non-state actors, the need for CVC 

mixing is the same—illicit CVC must be 

laundered, and CVC mixing provides 

the enhanced anonymity to separate 

illicitly obtained CVC from the 

underlying illicit activity. 

Non-state-affiliated actors commonly 

use CVC mixing services to launder 

their proceeds from large scale heists. 

The proceeds from the heists that 

targeted a CVC exchanger 40 and crosschain bridge Nomad 41 were, for 

instances, laundered using the Tornado 

Cash CVC mixer. 

In addition to the use of CVC mixing 

by non-state-affiliated actors, FinCEN 

assesses that, based on public and nonpublic reporting, DPRK state-sponsored 

or -affiliated cyber threat actors are 

responsible for a substantial portion of 

illicit or stolen CVC funds sent to CVC 

mixers,42 and that the DPRK utilized 

CVC mixing to launder proceeds in an 

attempt to obfuscate its connection to 

those funds. The DPRK uses the mixed 

proceeds of these thefts to support its 

WMD program.43 44 A publicly available 

analysis in February 2021 determined 

that individuals acting for or on behalf 

of the North Korean government 

laundered more than 65 percent of 

stolen CVC through CVC mixers—an 

increase from 42 percent in 2020 and 21 

percent in 2019.45 Further, publicly 

available analysis in February 2022 

assessed that the DPRK is a systematic 

money launderer and that its use of 

multiple CVC mixers is a calculated 

attempt to obscure the origins of its illgotten CVCs while converting them into 

fiat currency.46 In the same year, there 

was a notable increase in large scale 

heists carried out by, or in support of, 

the DPRK, with associated use of CVC 

mixing and CVC mixers. OFAC 

sanctioned two CVC mixers, Blender.io 

and Tornado Cash, used to launder 

illicit proceeds of the March 2022 Axie 

Infinity heist and the June 2022 

Harmony heist, both of which were 

carried out by North Korea’s Lazarus 

Group.47 48 In addition, DOJ has 

determined that ChipMixer processed 

over $700 million in Bitcoin associated 

with wallet addresses identified as 

containing stolen CVC, including CVC 

related to the Axie Infinity and the 

Harmony heists.49 The Federal Bureau 

of Investigation (FBI) has also 

determined that North Korean cyber 

actors laundered over $60 million worth 

of Ethereum stolen during the Harmony 

heist through RAILGUN, a United 

Kingdom-based CVC mixer.50 51 52

Importantly, DPRK-sponsored and 

-affiliated actors’ desire to rely on CVC 

mixing appears unlikely to abate. Most 

recently, in August 2023 the FBI 

attributed the June 2023 Atomic Wallet 

heist to the Lazarus Group, and opensource reporting indicates that the 

Lazarus Group used specific services 

including Sinbad, a CVC mixer, to 

launder the stolen CVC.53 54

In brief, non-state actors and, 

significantly, DPRK state-sponsored or 

-affiliated cyber threat actors have 


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55Europol, One of the darkweb’s largest 

cryptocurrency laundromats washed out, Mar. 15, 

2023, available at https://www.europol.europa.eu/

media-press/newsroom/news/one-of-darkwebslargest-cryptocurrency-laundromats-washed-out. 

56See FinCEN October 2021 FTA. FinCEN 

examined ransomware-related SARs filed between 

January 1, 2021, and June 30, 2021, to determine 

trends. The full data set consisted of 635 SARs 

reporting $590 million in suspicious activity. From 

this data, FinCEN identified the top 10 most 

common ransomware variants and analyzed their 

indicators of compromise through commercially 

available analytics tools. USD figures cited in this 

analysis are based on the value of BTC when the 

transactions occurred. 

57Chainalysis, Crypto Mixer Usage Reaches Alltime Highs in 2022 With Nation State Actors and 

Cybercriminals Contributing Significant Volume, 

July 14, 2022, available at https://

blog.chainalysis.com/reports/cryptocurrencymixers/. 

58 In August 2022, FinCEN analyzed 10 mixers, 

finding that these services processed more than $20 

billion in total volume between January 2011 and 

August 2022. The majority of this total occurred 

between January 2021 and August 2022. FinCEN 

assessed what sources constituted high risk and 

illicit activites based on commercial source 

attributions of entities. 

59FATF, Targeted Update On Implementation Of 

The FATF Standards On Virtual Assets And Virtual 

Asset Service Providers, June 2022, p. 24, available 

at https://www.fatf-gafi.org/media/fatf/documents/ 

recommendations/Targeted-UpdateImplementation-FATFStandards-VirtualAssetsVASPs.pdf. 

60See U.S. Treasury May 2022 Press Release. 

OFAC identified Conti and Sodinokibi as Russianlinked malign ransomware groups in their 

designation of Blender.io on May 6, 2022. 

61 Id. 

62See FinCEN October 2021 FTA. 

63See First Bitcoin ‘‘Mixer’’ Penalized by 

FinCEN, October 19, 2020. 

64 DOJ, Individual Arrested and Charged with 

Operating Notorious Darknet Cryptocurrency 

‘Mixer’, Apr. 28, 2021, available at https://

www.justice.gov/opa/pr/individual-arrested-andcharged-operating-notorious-darknetcryptocurrency-mixer. 

65United States Government Accountability 

Office, VIRTUAL CURRENCIES Additional 

Information Could Improve Federal Agency Efforts 

to Counter Human and Drug Trafficking, Dec. 2021, 

p. 29, available at https://www.gao.gov/assets/gao22-105462.pdf. 

66 DOJ, Ohio Resident Pleads Guilty to Operating 

Darknet-Based Bitcoin ‘Mixer’ That Laundered Over 

$300 Million, Aug. 18, 2021, available at https://

www.justice.gov/opa/pr/ohio-resident-pleads-guiltyoperating-darknet-based-bitcoin-mixer-launderedover-300-million. 

67See The 2023 Crypto Crime Report, p. 46. 

68See Crypto Money Laundering: Four Exchange. 

69Although this analysis assessed only CVC sent 

to CVC mixers without considering other forms of 

CVC mixing (as identified by this NPRM), its 

findings are nevertheless instructive. 

70Chainalysis, Crypto Mixers and AML 

Compliance, August 23, 2022, available at https:// 

blog.chainalysis.com/reports/crypto-mixers/; see 

Elliptic, What are Bitcoin Mixers & Are They 

Compliant With AML Standards?, May 7, 2018, 

available at https://elliptic.co/blog/bitcoin-mixersassessing-risk-bitcoin-transactions. 

repeatedly used, and continue to use, 

CVC mixing to launder illicit proceeds 

from large-scale CVC theft and heists. 

3. CVC Mixing Is Used by Ransomware

and Darknet Markets

CVC mixing services that obfuscate 

blockchain trails are attractive for 

cybercriminals looking to launder illegal 

proceeds from malicious cyber-enabled 

activities, including ransomware 

attacks.55 FinCEN assesses that threat 

actors avoiding reusing wallets, using 

CVC mixing services, and ‘‘chain 

hopping’’ have been prevalent 

associated money laundering 

typologies.56 Open-source analysis in 

July 2022 reported that nearly 10 

percent of all CVC sent from addresses 

tied to illicit activity were sent to CVC 

mixers, while no other service type 

exceeded a 0.3 percent CVC mixer 

sending share.57 FinCEN’s analysis of 

the top 10 CVC mixers by volume per 

commercially available data determined 

that approximately 33 percent of all 

deposits as of August 2022 were 

attributed to high risk sources, with 13 

percent of all deposits coming from 

known illicit activities.58 More 

significantly, only a portion of the 

activity in the CVC ecosystem with 

exposure to CVC mixing is captured by 

BSA reporting. As a result, FinCEN 

assesses that high-risk deposits into 

CVC mixers are likely underreported, 

and the percent of CVC tied to illicit 

activity is likely higher. 

The relationship between CVC mixing 

and malicious cyber-enabled and other 

criminal activities is evident through 

the reliance of ransomware actors on 

CVC mixing. The Financial Action Task 

Force (FATF) identified this connection, 

noting in 2022 the ongoing and growing 

threat of criminal misuse of CVC for the 

receipt and laundering of illicit 

proceeds from ransomware attacks, 

expressing particular concern that 

ransomware cybercriminals are 

increasingly using CVC mixers to 

launder their illicit proceeds.59

Similarly, between January and June 

2021, FinCEN observed the use of CVC 

mixing services (as reflected in BSA 

reporting of suspicious activity) with 

the top 10 ransomware strains identified 

as sending approximately $35.2 million 

to CVC mixers. During this same time 

period FinCEN also observed ‘‘chain 

hopping’’ by ransomware actors to 

obfuscate the orgin of their proceeds as 

well as that ransomware actors layered 

funds through multiple wallet addresses 

and avoided reusing wallet addresses 

for each attack. The most prevalent 

ransomware variants observed by 

FinCEN between January and June 2021 

were Russia-affiliated REvil/Sodinokibi, 

and Conti,60 and Russian-speaking 

DarkSide, Avaddon, and Phobos.61 62

The relationship between CVC mixing 

and illicit activities is likewise 

prevalent in transactions involving 

darknet markets. CVC mixing services 

often deliberately operate opaquely and 

advertise their services as a way to pay 

anonymously for illicit items such as 

illegal narcotics, firearms, and child 

sexual abuse material.63 According to 

DOJ, the mixer Bitcoin Fog—the longest 

running Bitcoin money laundering 

service on the darknet—laundered CVC 

from darknet marketplaces tied to illegal 

narcotics, computer fraud and abuse 

activities, and identity theft.64

Additionally, according to the 

Government Accountability Office and 

DOJ, the dismantled darknet market 

Alphabay allegedly not only sold and 

purchased various illegal drugs, illicit 

goods, and services with CVC, but also 

allegedly provided mixing services, via 

the CVC mixer Helix, to obfuscate CVC 

transactions on the site.65 66

As these examples demonstrate, illicit 

actors of all types conducting illicit 

cyber activity, including ransomware 

attacks and transactions on darknet 

markets, frequently seek out services 

that mask their illicit transactions and 

favor the enhanced anonymity provided 

by CVC mixing. Furthermore, FinCEN 

assesses that the percentage of mixing 

activity attributed to illicit activity is 

increasing. According to publicly 

available analysis reported in January 

2023, the total amount of CVC sent to 

CVC mixers fell significantly, likely due 

to OFAC designation of two CVC 

mixers, Blender.io and Tornado Cash. 

However, the analysis noted the CVC 

that was sent to CVC mixers in 2022 was 

more likely to come from illicit sources 

than in previous years—24 percent of 

the $7.8 billion 67 processed by mixers 

in 2022 versus 10 percent of the $11.5 

billion processed by mixers in 2021.68

This shift constitutes a 62.78 percent 

increase in the illicit value flowing 

through CVC mixers, year over year.69

B. The Extent to Which the Class of

Transactions Is Used for Legitimate

Business Purposes

FinCEN recognizes that there are 

legitimate reasons why responsible 

actors might want to conduct financial 

transactions in a secure and private 

manner given the amount of information 

available on public blockchains. 

FinCEN also recognizes that, in addition 

to illicit purposes, CVC mixing may be 

used for legitimate purposes, such as 

privacy enhancement for those who live 

under repressive regimes or wish to 

conduct licit transactions 

anonymously.70 Still, CVC mixing 

presents an acute money laundering risk 

because it shields information from 


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responsible third parties, such as 

financial institutions and law 

enforcement. 

FinCEN is concerned that CVC mixing 

makes CVC flows untraceable by law 

enforcement and makes potentially 

suspicious transactions unreportable by 

responsible financial institutions— 

thereby fostering illicit activity as 

described elsewhere in this document. 

More importantly, FinCEN assesses that 

the percentage of CVC mixing activity 

attributed to illicit activity is increasing. 

At the same time, because of the lack of 

available transactional information, 

FinCEN cannot fully assess the extent to 

which, or quantity thereof, CVC mixing 

activity is attributed to legitimate 

business purposes. 

Thus, the legitimate applications of 

CVC mixing must be carefully weighed 

against the exposure of the U.S. 

financial system to ongoing illicit use of 

CVC mixing. Given the substantial risks 

posed by CVC mixing, the fact that CVC 

mixing can be used for some legitimate 

business purposes does not alter 

FinCEN’s conclusion that this class of 

transactions is of primary money 

laundering concern. 

C. The Extent to Which Action by

FinCEN Would Guard Against

International Money Laundering and

Other Financial Crimes

Given the threats posed to U.S. 

national security and the U.S. financial 

system by obfuscation of illicit proceed 

flows through CVC mixing, FinCEN 

believes that imposing recordkeeping 

and reporting requirements under 

special measure one would guard 

against international money laundering 

and other financial crimes by increasing 

transparency in these transactions, and 

thus render them less attractive to illicit 

actors while also providing additional 

information to support law enforcement 

investigations. 

This additional transparancy would 

serve two purposes. First, it would 

enable investigations by law 

enforcement and regulators to support 

money laundering investigations, 

including cases against North Korean 

and Russian cybercriminals that pose a 

threat to U.S national security and the 

U.S. financial system. Second, it would 

highlight the risks and deter illicit 

actors’ use of CVC mixing services, 

including by foreign state-sponsored or 

-affiliated cyber actors’ laundering

proceeds of CVC theft to facilitate WMD

proliferation, ransomware attackers’

laundering of ransoms, and obfuscation

of transactions associated with the use

of illicit darknet markets.

V. Proposed Enhanced Recordkeeping

and Reporting by Covered Financial

Institutions Where a Covered Financial

Institution Knows, Suspects, or Has

Reason To Suspect a Transaction

Involves CVC Mixing Within or

Involving a Jurisdiction Outside the

United States

Having found that transactions 

involving CVC mixing within or 

involving a jurisdiction outside the 

United States are a class of transactions 

that are of primary money laundering 

concern, FinCEN proposes imposing 

recordkeeping and reporting obligations 

on covered financial institutions under 

special measure one. Such 

recordkeeping and reporting obligations 

would require 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 the 

United States. 

FinCEN believes that this special 

measure is the best available tool to 

mitigate the risks posed by CVC mixing. 

It would appropriately collect 

information, which will discourage the 

use of CVC mixing by illicit actors, and 

is necessary to better understand the 

illicit finance risk posed by CVC mixing 

and investigate those who seek to use 

CVC mixing for illicit ends. At the same 

time, this special measure will 

minimize the burden upon financial 

institutions and those who seek to use 

mixing for legitimate purposes. The 

reporting obligations under this special 

measure apply to covered financial 

institutions that directly engage with 

CVC transactions, such as exchangers, 

and do not encompass indirect fiat 

transactions by covered U.S. financial 

institutions, such as a bank sending 

funds on behalf of a CVC exchanger that 

is acting on behalf of a customer 

purchasing CVC previously processed 

through a CVC mixer. 

As proposed by FinCEN, special 

measure one would require 

recordkeeping and reporting of 

biographical and transactional 

information related to transactions 

involving CVC mixing, increasing 

transparency and thereby rendering the 

use of CVC mixing services by illicit 

actors less attractive. Furthermore, the 

information generated by this special 

measure would support investigations 

into illicit activities by actors who make 

use of CVC mixing to launder their illgotten CVC by law enforcement. At 

present, there is no similar or equivalent 

mechanism possessed by law 

enforcement to readily collect such 

information, depriving investigators of 

the information necessary to more 

effectively understand, investigate, and 

hold illicit actors accountable. 

Collectively, the outcomes of the 

proposed recordkeeping and reporting 

requirement—discouraging the use of 

CVC mixing by illicit actors and closing 

the information gap in service of 

increased investigation of those illicit 

actors who continue to make use of CVC 

mixing—will aid in the protection of the 

U.S. financial system. 

FinCEN has determined that 

imposition of special measure one 

would most appropriately collect 

necessary information while limiting 

the burden placed on covered financial 

institutions and users of CVC mixing. 

As set out further below in Section V.B., 

FinCEN believes that the existing riskbased approach to AML/CFT 

compliance used by covered financial 

institutions already largely encompasses 

the information FinCEN is requesting. 

Despite this ready availability of 

information, covered financial 

institutions do not, and often need not, 

universally report that information to 

FinCEN at present. The proposed 

reporting requirement would address 

this reporting gap. 

FinCEN considered the other special 

measures available under section 311. 

As discussed further in Section V.E. 

below, it determined that none of them 

would appropriately balance the 

interests in permitting secure and 

private financial transactions while 

addressing the risks posed by CVC 

mixing, or were otherwise ill-suited to 

CVC-related transactions, and thus 

incapable of collecting information 

necessary to add transparency to them. 

Moreover, FinCEN also considered the 

appropriate scope of the proposed 

recordkeeping and reporting 

requirements, and determined that the 

proposed approach would best capture 

necessary information and mitigate risks 

associated with CVC mixing and 

facilitate investigations of illicit actors, 

while preserving legitimate actors’ 

ability to continue conducting secure 

and private financial transactions. 

In proposing this special measure, 

FinCEN consulted with the Chairman of 

the Board of Governors of the Federal 

Reserve System, the Office of the 

Comptroller of the Currency, the 

Secretary of State, certain staff of the 

Securities and Exchange Commission, 

the Commodity Futures Trading 

Commission, the National Credit Union 

Administration Board, the Federal 

Deposit Insurance Corporation, and the 

Attorney General. These consultations 

involved obtaining interagency views on 

the imposition of the proposed 

recordkeeping and reporting 


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71See AUSTRAC, Preventing the Criminal Abuse 

of Digital Currencies Financial Crime Guide, Apr. 

2022, pp. 1, 15–17, available at https://

www.austrac.gov.au/sites/default/files/2022-04/ 

AUSTRAC_FCG_

PreventingCriminalAbuseOfDigitalCurrencies_

FINAL.pdf; Government of Canada, Updated 

Assessment of Inherent Risks of Money Laundering 

and Terrorist Financing in Canada, Mar. 2023, 

available at https://www.canada.ca/en/departmentfinance/programs/financial-sector-policy/updatedassessment-inherent-risks-money-launderingterrorist-financing-canada.html; Republic of 

Seychelles, ML/TF Overall National Risk 

Assessment for VA & VASPs, July 2022, pp. 32, 43, 

available at https://www.cbs.sc/Downloads/ 

publications/aml/ReportSeychellesONRAMLTFofVAandVASP-26.08.2022.pdf; Europol, Seizing 

the Opportunity: 5 Recommendations For CryptoAssets Related Crime And Money Laundering 

(2022), p. 6, available at https://

www.europol.europa.eu/cms/sites/default/files/ 

documents/2022_Recommendations_Joint_

Working_Group_on_Criminal_Finances_and_

Cryptocurrencies_.pdf; FATF, Updated Guidance 

for a Risk-Based Approach, Oct. 2021. 

72See FATF, Updated Guidance for a Risk-Based 

Approach, Oct. 2021, at p. 94. 

73Financial Stability Board, Assessment of Risks 

to Financial Stability from Crypto-assets, Feb. 16, 

2022, at p. 5, available at https://www.fsb.org/wpcontent/uploads/P160222.pdf. 

requirements and the effect that such a 

recordkeeping and reporting 

requirements would have on the 

domestic and international financial 

system. 

Below is a discussion of the relevant 

statutory factors FinCEN considered in 

proposing these recordkeeping and 

reporting requirements. 

A. Whether Similar Action Has Been or 

Is Being Taken by Other Nations or 

Multilateral Groups 

FinCEN is not aware of any other 

nation or multilateral group that has 

imposed, or is currently imposing, 

similar recordkeeping and reporting 

requirements relating to transactions 

involving CVC mixing. However, having 

likewise identified the significant 

money laundering threat that CVC 

mixing poses, numerous other nations 

and certain multilateral groups have 

issued public statements regarding the 

risks presented by CVC mixing, called 

for appropriate regulation, and/or taken 

action against specific CVC mixers. 

Several countries—such as Australia, 

Canada, and Seychelles—and 

multilateral groups, such as FATF and 

Europol, have identified CVC mixing as 

a risk indicator for money laundering or 

terrorist financing and have found that 

CVC mixing can make it more difficult 

for law enforcement to trace and 

attribute transactions, complicating 

investigations.71 Japan requires 

information from VASPs on their 

exposure to CVC mixing services to 

assess their risk exposure and assign 

risk ratings.72 Moreover, as discussed 

above, numerous countries have 

investigated and prosecuted individual 

CVC mixers and associated persons 

engaged in or facilitating illicit 

activities. These efforts are generally not 

as expansive as FinCEN’s proposed rule 

would be. However, FinCEN’s 

identification of CVC mixing as a class 

of transactions of primary laundering 

concern and proposed special measure 

may support efforts of other countries 

by clearly outlining the illicit finance 

risks associated with CVC mixing and 

demonstrating means of enhancing 

transparency as well as mitigating these 

risks. 

B. Whether the Imposition of Any 

Particular Special Measure Would 

Create a Significant Competitive 

Disadvantage, Including Any Undue 

Cost or Burden Associated With 

Compliance, for Financial Institutions 

Organized or Licensed in the United 

States 

While FinCEN assesses that the 

recordkeeping and reporting 

requirements proposed in this NPRM 

will place some cost and burden on 

domestic financial institutions, these 

burdens are neither undue nor 

inappropriate in view of the threat 

posed by the obfuscation of illicit 

activity enabled by CVC mixing. The 

existing risk-based approach to AML/ 

CFT compliance used by covered 

financial institutions already largely 

encompasses the information FinCEN is 

requesting. While the information is 

available to covered financial 

institutions, at present it is not 

universally reported to FinCEN. That is 

to say, FinCEN assesses that covered 

financial institutions already possess 

customer information and can identify 

when their customers engage in a 

covered transaction. This proposed rule 

would compel covered financial 

institutions to attribute a covered 

transaction to the involved customer(s) 

and report this information to FinCEN. 

Accordingly, the collection of the 

information in question would not 

create any undue costs or burdens on 

covered financial institutions. Covered 

domestic financial institutions may 

need to modify or replace the current 

systems in place used to detect other 

types of illicit activity in virtual 

currency transactions, such as sanctions 

compliance systems, to detect 

transactions involving CVC mixing. 

Such burdens are commensurate with 

established AML/CFT protocols. 

C. The Extent to Which the Action or the 

Timing of the Action Would Have a 

Significant Adverse Systemic Impact on 

the International Payment, Clearance, 

and Settlement System, or on Legitimate 

Business Activities Involving CVC 

Transactions 

FinCEN assesses that imposition of 

the proposed special measure would 

have minimal impact upon the 

international payment, clearance, and 

settlement system, or on legitimate 

business activities involving CVC 

transactions. As noted in the February 

16, 2022, Financial Stability Board’s 

Assessment of Risks to Financial 

Stability, direct connections between 

CVC and systemically important 

financial institutions and core financial 

markets are limited at present.73

Volatility and disruptions in the CVC 

ecosystem have been contained within 

the CVC markets and have not 

significantly spilled over to financial 

markets and infrastructures. 

D. The Effect of the Proposed Action on 

United States National Security and 

Foreign Policy 

As described above, CVC mixers are 

used by DPRK-affiliated and Russiaaffiliated threat actors, among others, to 

facilitate illicit activities ranging from 

WMD proliferation to ransomware 

attacks affecting victims in both the 

United States and around the world, 

and whose interests are adversarial to 

the national security interests of the 

United States. Imposing recordkeeping 

and reporting requirements on 

transactions that involve CVC mixing 

will enhance financial intelligence on 

the identity of illicit users who rely 

upon mixers to obfuscate their identities 

and sources of CVC, as well as provide 

insight into those CVC mixers that 

facilitate such illicit activity. Such a 

rule would therefore best serve the 

national security interests of the United 

States and support efforts to protect the 

United States financial system from 

illicit finance threats. 

E. Consideration of Alternative Special 

Measures 

In assessing the appropriate special 

measure to impose, FinCEN considered 

alternatives to imposing recordkeeping 

and reporting requirements under 

special measure one. However, FinCEN 

believes that recordkeeping and 

reporting requirements under special 

measure one would most effectively 

safeguard the U.S. financial system from 


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74As noted in note 17, FinCEN notes that CVC 

or ‘‘virtual currency’’ by itself does not meet the 

definition of a ‘‘currency’’ under 31 CFR 

1010.100(m). Additionally, the potential 

characterization of CVC as currency, securities, 

commodities, or derivatives for the purposes of any 

other legal regime, such as the Federal securities 

laws or the Commodity Exchange Act, is outside the 

scope of this proposed rule. However, as described 

in the FinCEN 2019 CVC Guidance, if assets that 

other regulatory frameworks defined as 

commodities, securities, or futures contracts were to 

be specifically issued or later repurposed to serve 

as a currency substitute, then the asset itself could 

be a type of value that substitutes for currency and 

be defined as CVC for the purposes of this proposed 

rule, in addition to being subject to other applicable 

regulatory frameworks. 

the illicit finance risks posed by CVC 

mixing. 

In particular, none of the other special 

measures available under section 311 

would appropriately balance the 

interests in permitting secure and 

private financial transactions while 

addressing the risks posed by CVC 

mixing or would be suited to CVCrelated transactions. For instance, 

FinCEN considered special measure 

two, which is designed to obtain 

beneficial ownership information 

relating to accounts opened in the 

United States by certain foreign persons 

or their agents. However, FinCEN 

determined that such a special measure 

would fail to collect key information of 

interest relating to CVC transactions that 

involve CVC mixing such as the identity 

of the participants and beneficial 

owners of the CVC involved. FinCEN 

also considered special measures three 

through five, which are focused upon 

transactions conducted through 

payable-through accounts and 

correspondent banking relationships 

and determined that these are less 

relevant in the context of CVC 

transactions, including those that 

involve CVC mixing, as CVC 

transactions are conducted outside of 

the traditional banking system. 

More broadly, FinCEN also 

considered the appropriate scope of the 

proposed recordkeeping and reporting 

requirements. Of note, FinCEN 

considered issuing a rule pursuant to 

section 311 that would have been 

narrowly scoped to address terror 

finance involving Hamas and ISIS and/ 

or North Korea-sponsored and -affiliated 

actors. However, FinCEN determined 

that such a narrow approach would be 

insufficient to address the relevant risks 

detailed elsewhere in this action. Given 

the nature and use of CVC mixing, 

covered financial institutions would 

typically have insufficient information 

to determine whether the CVC 

transaction was initiated North Koreanaffiliated actors. FinCEN believes this 

would be true of any similarly narrow 

approach, regardless of the actors 

involved. Therefore, FinCEN has 

determined that additional 

recordkeeping and reporting 

requirements set forth in this proposed 

rule would best mitigate the risks 

associated with CVC mixing, deter illicit 

actors, facilitate law enforcement 

investigations into illicit activity, and 

adequately protect the U.S. financial 

system from the illicit financial risk 

posed by CVC transactions that involve 

CVC mixing, while preserving legitimate 

actors’ ability to conduct secure and 

private financial transactions. 

VI. Section-by-Section Analysis of 

Proposed Regulations 

The goal of this proposed rule is to 

implement an effective and efficient 

reporting regime to combat and deter 

money laundering associated with CVC 

mixing and increase transparency in a 

sector of the United States virtual 

currency ecosystem with identified 

illicit finance risks. 

A. Definitions 

1. Definition of Convertible Virtual 

Currency 

The term ‘‘convertible virtual 

currency’’ or CVC, means a medium of 

exchange that either has an equivalent 

value as currency, or acts as a substitute 

for currency, but lacks legal tender 

status.74 Although Bitcoin has legal 

tender status in at least two 

jurisdictions, the term CVC includes 

Bitcoin for the purposes of this 

proposed rule. 

2. Definition of CVC Mixing 

The term ‘‘CVC mixing’’ means 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. 

This definition excepts the use of 

internal protocols or processes to 

execute transactions by banks, brokerdealers, or money services businesses, 

including VASPs, that would otherwise 

constitute CVC mixing, provided that 

these financial institutions preserve 

records of the source and destination of 

CVC transactions when using such 

internal protocols and processes, and 

provide such records to regulators and 

law enforcement, where required by 

law. This exemption is designed to 

avoid capturing transactions with 

known VASPs that use these internal 

protocols or processes as part of their 

business purpose and that are 

positioned to appropriately respond to 

inquiries by law enforcement and other 

relevant authorities. However, if the 

covered financial institution is unsure if 

these processes are used as part of a 

business purpose, they should collect 

the recordkeeping and reporting 

information. 

FinCEN is seeking to address the 

primary money laundering concern 

posed by CVC mixing. The proposed 

definition of CVC mixing is designed to 

capture methodologies used by illicit 

actors to break the traceability of their 

illicit proceeds and create a mechanism 

on which which covered businesses 

would be required to report when they 

observe CVC mixing transactions. The 

exception to the definition is crafted to 

avoid imposing undue burden on 

covered businesses, provided they are 

also taking appropriate steps to ensure 

information is being retained as 

prescribed by law. 

3. Definition of CVC Mixer 

The term ‘‘CVC mixer’’ means any 

person, group, service, code, tool, or 

function that facilitates CVC mixing. 

FinCEN acknowledges this definition is 

relatively broad; however, given the 

nature of CVC mixing, FinCEN deems 

the breadth of this definition to be 

necessary. 

4. Definition of Covered Financial 

Institution 

The proposed rule defines ‘‘covered 

financial institution’’ as the term is 

defined 31 CFR 1010.100(t), which in 

general includes the following: 

• A bank (except bank credit card 

systems); 

• A broker or dealer in securities; 

• A money services business, as 

defined in 31 CFR 1010.100 (ff). This 

would include VASPs and other persons 

that provide money transmission 

services, which ‘‘. . . means the 

acceptance of . . . value that substitutes 

for currency from one person and the 

transmission of . . . value that 

substitutes for currency to another 


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75 31 CFR 1010.100(ff)(5)(A). 

76FinCEN is not, at this time, proposing that 

covered financial instutitons would be required to 

perform a lookback to identify covered transactions 

that occurred prior to issuance of a final rule. 

77See FinCEN, Imposition of Fifth Special 

Measure against the Islamic Republic of Iran as a 

Juridiction of Primary Money Laundering Concern, 

84 FR 59302, Nov. 4, 2019, available at https://

www.fincen.gov/sites/default/files/shared/2019- 

23697.pdf. 

78See FinCEN 2016 Imposition of Special 

Measure Against North Korea. 

79See FinCEN, FinCEN Announces $29 million 

Enforcement Action Against Virtual Asset Service 

Provider Bittrex for Willful Violations of the Bank 

Secrecy Act, Oct. 11, 2022, available at https://

www.fincen.gov/news/news-releases/fincenannounces-29-million-enforcement-action-againstvirtual-asset-service. 

80See FinCEN, FinCEN Announces $100 Million 

Enforcement Action Against Unregistered Futures 

Commission Merchant BitMEX for Willful 

Violations of the Bank Secrecy Act, Aug. 10, 2021, 

available at https://www.fincen.gov/news/newsreleases/fincen-announces-100-millionenforcement-action-against-unregisteredfutures#:∼:text=Despite%20BitMEX’s%20public

%20representation%20that,trading%20platform

%20and%20circumvent%20internet. 

location or person by any means 

. . .’’; 75

• A telegraph company; 

• A casino; 

• A card club; 

• A person subject to supervision by 

any state or Federal bank supervisory 

authority; 

• A futures commission merchant or 

an introducing broker-commodities; and 

• A mutual fund. 

5. Definition of Covered Transaction 

The term ‘‘covered transaction’’ 

means a transaction as defined in 31 

CFR 1010.100(bbb)(1) in CVC by, 

through, or to the covered financial 

institution that the covered financial 

institution knows, suspects, or has 

reason to suspect involves CVC mixing 

within or involving a jurisdiction 

outside the United States. The reference 

to FinCEN’s definition of ‘‘transaction’’ 

means that a covered transaction 

includes the following: a purchase, sale, 

loan, pledge, gift, transfer, delivery, or 

other disposition, and with respect to a 

financial institution includes a deposit, 

withdrawal, transfer between accounts, 

exchange of currency, loan, extension of 

credit, purchase or sale of any stock, 

bond, certificate of deposit, or other 

monetary instrument, security, contract 

of sale of a commodity for future 

delivery, option on any contract of sale 

of a commodity for future delivery, 

option on a commodity, purchase or 

redemption of any money order, 

payment or order for any money 

remittance or transfer, purchase or 

redemption of casino chips or tokens, or 

other gaming instruments or any other 

payment, transfer, or delivery by, 

through, or to a financial institution, by 

whatever means effected. To this end, 

FinCEN would expect covered financial 

institutions to employ a risk-based 

approach to compliance of this 

proposed rule, and more broadly, the 

Bank Secrecy Act, including by using 

the variously available free and paid 

blockchain analytic tools commonly 

available.76

The limitation to transactions ‘‘in 

CVC’’ means that the reporting 

obligations under this special measure 

apply to covered financial institutions 

that directly engage with CVC 

transactions, such as a CVC exchange. It 

also means that covered transactions do 

not include transactions that are only 

indirectly related to CVC, such as when 

a CVC exchanger sends the non-CVC 

proceeds of a sale of CVC that was 

previously processed through a CVC 

mixer from the CVC exchanger’s bank 

account to the bank account of the 

customer selling CVC. 

It is critical that all financial 

institutions, including those with 

visibility into CVC flows, such as CVC 

exchangers—generally considered 

money services businesses (MSBs) 

under the Bank Secrecy Act—identify 

and quickly report suspicious activity, 

and conduct appropriate risk-based 

customer due diligence or, where 

required, enhanced due diligence. For 

example, in appropriately conducting a 

review to identify suspicious activity 

associated with potential sanctions 

evasion and to comply with existing 

FinCEN 311s on Iran and DPRK, 

financial institutions must know if 

transactions originate from or are 

destined to prohibited jurisdictions, 

such as Iran 77 or DPRK.78 Indeed, 

FinCEN can, and has, assessed civil 

monetary penalties on covered financial 

institutions that have failed to conduct 

such due diligence, including, recently, 

in enforcement actions against Bittrex 79

and BitMex.80 In light of the existing 

compliance practices of covered 

financial institutions, FinCEN expects 

that complying with this proposed rule 

should not add a significant additional 

burden. FinCEN invites public comment 

on this assessment. 

B. Reporting and Recordkeeping 

Requirements 

1. Information To Be Reported 

Although FinCEN recognizes much of 

the information that would be collected 

under this proposed rule is already 

provided to the most frequent reporters 

in the CVC ecosystem, imposing 

additional recordkeeping and reporting 

requirements is necessary to address the 

money laundering threat posed by CVC 

mixing because, at present, covered 

financial institutions do not regularly 

report when their customers send or 

receive CVC in transactions with indicia 

of CVC mixing. Reporting that links 

customers to the CVC mixing 

transactions will aid law enforcement 

and national security investigations of 

illicit activity involving CVC. The 

following addresses the types of 

information the rulemaking proposes to 

collect. 

(i) Reportable Information Regarding the 

Covered Transaction 

In connection with all covered 

transactions, FinCEN proposes to collect 

the following information: 

• The amount of any CVC 

transferred, in both CVC and its U.S. 

dollar equivalent when the transaction 

was initiated: The amount of CVC 

transferred would aid in performing 

analysis using a risk-based approach. 

The proposed rule would require the 

amount in CVC and U.S. dollar 

equivalent when the transaction was 

initiated to account for volatile CVC 

prices and aid in consistent monitoring 

and risk management purposes. 

• CVC type: The proposed rule would 

require reporting of the type of CVC 

used in a covered transaction. The type 

of CVC used would allow for trend 

analysis of preferred usage of different 

types of CVC, as well as ensure the 

correct blockchain analysis can be done 

given each CVC exists on different 

blockchains. Taken together with the 

amount of any CVC transferred, this 

information would inform trend 

analysis and allow for an improved 

understand of laundering typologies. 

• The CVC mixer used, if known: The 

proposed rule would require reporting 

of the CVC mixer used in the covered 

transaction. That information would 

assist in understanding trends of mixing 

activity as well as aid in understanding 

the quantity of CVC mixers in the CVC 

ecosystem. 

• CVC wallet address associated with 

the mixer: The proposed rule would 

require reporting of the CVC wallet 

address of the CVC mixer, if one is used, 

to aid in understanding of addresses 

associated with each CVC mixer. This 

information would assist with 

understanding the size, scale, and 

methodologies of CVC mixers by 

facilitating aggregate analysis of 

transactional data of CVC mixers. 

• CVC wallet address associated with 

the customer: The proposed rule would 

require reporting of the CVC wallet 

address of the customer to assist in the 

investigation of the covered transaction, 

including blockchain analysis to 


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determine if the wallet is associated 

with illicit activities. 

• Transaction hash: The proposed 

rule would require reporting of the 

transaction hash, which will allow an 

investigation of the specific transaction 

and assist in the identification of 

specific wallet addresses involved in the 

transaction(s), as well as more specific 

transactional meta data such as the date 

and time the transaction was completed. 

• Date of transaction: The proposed 

rule would require reporting of the date 

of transaction, which would assist in 

enforcing the proposed regulation, as 

well as assist in corroborating other 

reported information. 

• IP addresses and time stamps 

associated with the covered transaction: 

The proposed rule would require 

reporting of the IP address to obtain 

geographical information related to the 

covered transaction, which would assist 

trend analysis of patterns of covered 

transactions by geographic location. 

• Narrative: The proposed rule would 

require a description of activity 

observed by the covered financial 

institution, including a summary of 

investigative steps taken, provide 

additional context of the behavior, or 

other such information the covered 

financial institution believes would aid 

follow on investigations of the activity. 

As the covered financial institution 

would have insight into the normal 

pattern of its customers’ transactions, 

this narrative would assist with 

understanding if there is an 

uncharacteristic change in pattern of 

behavior. 

Importantly, under the proposed rule, 

covered financial institutions would 

continue to have an obligation to file a 

SAR when warranted, regardless of 

whether the covered financial 

institutions also filed a report required 

under the proposed rule. 

(ii) Reportable Information Regarding 

the Customer Associated With the 

Covered Transaction 

In respect of customers associated 

with covered transactions, FinCEN 

proposes to collect the following 

information: 

• Customer’s full name: The 

proposed rule would require reporting 

of the full name of the covered financial 

institution’s customer, as it appears in 

the customer’s proof of identification 

and related documents, such as passport 

or driver’s license or non-driver 

identification card, used by the 

customer when they validated their 

identity with the covered financial 

institution. 

• Customer’s date of birth: The 

proposed rule would require reporting 

of the full date of birth of the covered 

financial institution’s customer, as it 

appears in the customers onboarding 

file. 

• Address: The proposed rule would 

require reporting of the most 

appropriate address (residential or 

business) of the customer engaged in a 

covered transaction. Specifically, if the 

customer is a business, the business 

address would be reported, and, if the 

customer is an individual, the 

residential address would be reported. 

• Email Address associated with any 

and all accounts from which or to which 

the CVC was transferred: The proposed 

rule would require email address(es) 

used by a customer involved in a 

covered transaction and known to the 

covered institution. 

• Unique identifying number: For 

individuals, the proposed rule requires 

reporting of customers’ Internal 

Revenue Service (IRS) Taxpayer 

Identification Number (TIN) or, if the 

individual does not have one, a foreign 

equivalent. If the customer has neither 

a TIN nor a foreign equivalent, the 

proposed rule would require reporting 

of a non-expired United States or 

foreign passport number or other 

government-issued photo identification 

number, such as a driver’s license. For 

entities, the proposed rule would 

require reporting of the entity’s IRS TIN 

or, if the entity does not have one, a 

foreign equivalent or a foreign 

registration number. TINs and other 

unique identifying numbers provide law 

enforcement with the most efficient 

means to identify individuals 

potentially involved in illicit activity. 

2. Filing Procedures 

The proposed regulation would 

require a covered financial institution to 

collect, maintain records of, and report 

to FinCEN within 30 calendar days of 

initial detection of a covered 

transaction, in the manner that FinCEN 

may prescribe, certain information 

regarding covered transactions that 

involve CVC mixing. This includes 

certain information the covered 

financial institution shall provide with 

respect to each covered transaction 

which is examined in detail below. This 

proposed reportable information is 

similar to the information already 

collected by financial institutions to 

comply with their AML/CFT 

obligations; however, at present covered 

businesses would not necessarily report 

such information. Notably, the proposed 

regulation only requires a covered 

financial institution to report 

information in its possession, and thus 

does not require a covered institution to 

reach out to the transactional 

counterparty to collect additional 

information on the CVC mixing 

transaction. 

3. Recordkeeping Requirements 

Pursuant to the proposed rule, 

covered financial institutions would be 

required to maintain any records 

documenting compliance with the 

requirements of this regulation. 

VII. Request for Comments 

FinCEN invites comments on all 

aspects of the proposed rule, including 

the following specific matters: 

A. CVC Mixing as a Class of 

Transactions of Primary Money 

Laundering Concern 

1. What impact would this proposed 

rule have on legitimate activity 

conducted by persons in the course of 

conducting financial transactions? 

2. What impact would the proposed 

rule have on blockchain privacy or 

pseudonymity, noting that filings 

reported to FinCEN are not publicly 

releasable and the similarities of this 

proposal to the recordkeeping and 

reporting requirements of transactions 

using the traditional financial system, 

such as with wire or Automated 

Clearing House (ACH) transactions? 

3. Does the impact on privacy and 

legitimate applications identified in 

Section IV.B potentially outweigh the 

risks posed by illicit activity facilitated 

by CVC mixing? 

4. What challenges are anticipated 

with respect to identifying the foreign 

nexus of a CVC mixing transaction? 

5. Are there any other methods that 

covered financial institutions can use to 

be able to readily determine if covered 

transactions stemming from non-mixer 

CVC mixing have a foreign nexus? 

6. Are there sufficient tools available, 

either free or paid, that would aid 

covered financial instutitions to 

determine if covered transactions 

occurred outside the United States? 

7. Are there any other methods that 

covered financial institutions can use to 

be able to readily determine if covered 

transactions stemming from non-mixer 

CVC mixing have a foreign nexus? 

8. Has FinCEN appropriately weighed 

the legitimate and illicit activities 

associated with the use of CVC mixing? 

What other factors should be 

considered? 

B. Definitions 

1. Please provide suggested revisions 

to the proposed definitions that would 

better tailor the intended recordkeeping 

and reporting obligations to the 

objectives and uses described in this 

proposal. Where possible, please 


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81 5 U.S.C. 603. 

82 12 U.S.C. 1532, Public Law 104–4 (Mar. 22, 

1995). 

83 44 U.S.C. 3507(a)(1)(D). 

provide information or examples to 

illustrate how the recommended 

revisions improve upon the definitions 

as proposed. 

2. Does the proposed definition of 

CVC mixing adequately capture the 

activity of concern? If not, please 

provide suggested revisions to the 

proposed definition that would better 

capture such activity. Where possible, 

please provide information or examples 

to illustrate how the recommended 

revisions would improve upon the 

definition as proposed. 

3. Does the proposed exception to the 

definition of CVC mixing adequately 

account for legitimate activity 

conducted by VASPs and other financial 

institutions? If not, please provide 

suggested revisions to the proposed 

definition that would better capture 

such activity. Where possible, please 

provide information or examples to 

illustrate how the recommended 

revisions would improve upon the 

definition as proposed. 

C. Alternatives 

1. Is FinCEN’s proposal of enhanced 

recordkeeping under section 311’s 

special measure one most appropriate to 

the objectives of this proposed rule? 

Where possible, please provide 

suggestions for alternative means of 

achieving the objectives and illustrate 

how such means would work in 

practice. 

2. Would section 311’s special 

measures two through five be more 

appropriate to apply? If so, please 

explain why. 

D. Recordkeeping and Reporting 

1. Is the scope of the recordkeeping 

requirement appropriate? 

2. Is the list of information to be 

collected and reported appropriate to 

address the stated primary money 

laundering concern? 

3. Is the proposed mechanism for 

submission appropriate for the purpose 

of this proposed rule? 

4. Are there any alternative methods 

of submitting reports in an efficient and 

effective manner that FinCEN should 

consider utilizing? 

5. Are the proposed reporting and 

recordkeeping requirements discussed 

in Section VI.B.1 and 3 appropriately 

scoped? Are there additional types of 

information regarding reportable 

transactions or customers that should be 

collected? 

6. Should the proposed reporting and 

recordkeeping requirements apply to 

covered financial institutions that are 

the originator institution, the 

beneficiary institution, or both? 

7. In cases where the customer of a 

covered financial institution is a legal 

entity, should the implementation of 

special measure one also require the 

beneficial ownership of that legal entity 

be reported, in addition to the other 

proposed reporting requirements? 

E. Burden and Other Impacts of This 

Proposed Rule 

1. Does FinCEN accurately account for 

the burden and impact of this proposed 

rule when a covered financial 

institution knows, suspects, or has 

reason to suspect a transaction involves 

CVC mixing? 

2. Is there a less burdensome way of 

collecting information regarding the 

details of a CVC transaction, which the 

BSA’s AML/CFT objectives require 

financial institutions to collect, 

including know-your-customer and 

customer due diligence? 

3. Would the adoption of special 

measure one reporting and 

recordkeeping requirements, as 

proposed, impose expected costs to 

covered financial institutions; state, 

local, or tribal governments; or the 

private sector in excess of $177 million 

annually? $200 million annually? 

Where possible, please provide data or 

studies from an identifiable source that 

would support the response or describe 

why a source cannot be identified. 

4. To what extent should FinCEN 

consider the potential costs to currently 

unregistered or otherwise non-reporting 

entities that, if compliant, would incur 

costs if special measure one is adopted 

as proposed? If possible, please 

illustrate either quantitatively or 

qualitatively (by way of example or 

anecdote) how the recommended level 

of consideration would improve 

FinCEN’s estimate of regulatory impact. 

5. Are there any material facts, data, 

circumstances, or other considerations 

that, had they been included in 

FinCEN’s regulatory impact analysis, 

would have both improved the 

precision and accuracy of the analysis 

and substantially altered the assessment 

of the proposed rule’s impact? If so, 

please provide, including attribution to 

the sources of such information, where 

possible. 

6. Would the adoption of special 

measure one reporting and 

recordkeeping requirements, as 

proposed, impose significant costs on 

covered financial institutions that are 

small entities? On other small entities 

that are not covered financial 

institutions? Where possible, please 

provide data or studies from an 

identifiable source that would support 

the response or describe why a source 

cannot be identified. 

7. Are the due diligence requirements 

appropriately scoped in this proposed 

rule? 

8. What impact will this proposal 

have on augmenting law enforcement’s 

ability to track and trace CVC derived 

from cyber heists, ransomware, or 

similar illicit activity to aid the return 

of victim’s CVC? 

9. Are there any international efforts 

to address illicit finance risks stemming 

from mixing not addressed in the 

NPRM? 

10. What effect would the proposed 

rule have on international efforts to 

address the illicit use of CVC mixing? 

11. Are there specific examples of 

‘‘covered transactions’’ or sample 

scenarios that FinCEN could have 

provided to assist financial institutions 

and other affected parties in further 

understanding the intended 

applicability of the proposed definition 

of ‘‘covered transactions’’? 

Alternatively, are there other 

clarifications to the definitions in this 

NPRM, or other modifications to the 

proposed regulatory text that would 

meaningfully clarify when a covered 

transaction occurs that would warrant 

reporting? If so, please describe. 

12. Is FinCEN correct in its 

assessment that covered financial 

institutions would have access to 

reasonable and appropriate services or 

tools, whether free or paid, to be able to 

effectively identify covered 

transactions? If not, what are 

impediments to accessing such tools, 

and what costs would be associated 

with gaining access? 

13. To what extent could public 

guidance or other informational 

materials regarding compliance with the 

requirements of proposed special 

measure one (such as FAQs, prerecorded instructional audio-visual 

resources, or in-person presentations 

with industry groups) meaningfully 

reduce costs to covered financial 

institutions? Please describe any 

preferred method(s), as well as any 

qualitative or quantitive estimates of the 

extent to which costs are expected to be 

reduced. 

VIII. Regulatory Impact Analysis 

FinCEN has analyzed this proposed 

rule under Executive Orders 12866, 

13563, and 14094, the Regulatory 

Flexibility Act,81 the Unfunded 

Mandates Reform Act,82 and the 

Paperwork Reduction Act.83


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84See, specifically discussion supra Section IV. C. 

See generally discussion supra Section II. 

85See, e.g., discussion of Axie Infinity heist supra 

Section III.B. 

86See, e.g., discussion of use in connection with 

darknet market transactions and laundering the 

proceeds of ransomware attacks supra Sections III.B 

and IV.A. 

87See discussion supra Section IV.C. 

88See Section VII.E. 

89See, e.g., FinCEN 2019 CVC Guidance supra 

note 16 and FinCEN, Reporting Suspicious Activity 

A Quick Reference Guide for Money Services 

Businesses, September, 2007, available at https://

www.fincen.gov/sites/default/files/shared/report_

reference.pdf. 

90See, e.g., discussion supra Sections III.B and 

IV.A. 

91See infra note 121. 

92See infra note 122. 

93See discussion supra Section IV.A.3. 

94See invitation for public comment on potential 

costs and repercussions supra Section VII.B. 

95 31 U.S.C. 5318A(a)(4)(B). See discussion supra 

Section I. 

96See discussion of 31 U.S.C. 5318A(c)(1) 

requirements supra Section I. See also discussion 

of 31 U.S.C. 5318A(a)(4)(A) supra Sections I and V. 

As discussed above,84 the intended 

effects of the imposition of special 

measure one to CVC mixing are twofold. 

The rule is expected to: (1) facilitate the 

investigation and prosecution of illicit 

activities by parties using CVC mixing 

in furtherance of their unlawful 

objectives 85 and, in many cases,86

consequent private enrichment; and (2) 

disincentivize the use of CVC mixing in 

connection with money laundering and 

other financial crimes by reducing the 

likelihood that such CVC mixing will 

adequately insulate the underlying 

transactions from identification and 

traceability.87 In the analysis below, 

FinCEN discusses the economic effects 

that are expected to accompany 

adoption of the rule as proposed and 

assess such expectations in more 

granular detail. This discussion 

includes a detailed explanation of 

certain ways FinCEN’s conclusions may 

be sensitive to methodological choices 

and underlying assumptions made in 

drawing inferences from available data. 

Throughout, these have been outlined 

so that the public may review and 

provide comment.88

A. Assessment of Impact 

By requiring covered financial 

institutions to implement special 

measure one, the proposed rule would 

impose additional obligations on these 

institutions to report transactions that 

they know, suspect, or have reason to 

suspect involve CVC mixing because 

FinCEN has determined that CVC 

mixing, as a class of transactions, is of 

primary money laundering concern. 

The imposition of this special 

measure may require a shift in reporting 

practices, particularly with regard to the 

determination a covered financial 

institution would otherwise first need to 

make: that a transaction involving CVC 

mixing is suspicious and therefore 

reportable under the applicable SAR 

Rule.89 The reporting and recordkeeping 

requirements under special measure one 

would instead guide a covered financial 

institution to presume transactions that 

involve CVC mixing are inherently of 

primary money laundering concern. 

Therefore, under this proposal, the 

implied burden would shift from 

determining when a CVC transaction is 

reportable to determining when it is not 

reportable. 

FinCEN has considered the regulatory 

impact of the proposed rule and the 

economic consequences these changes 

would entail. The subsequent analysis 

details FinCEN’s finding that, in 

proportion to the thousands of covered 

financial institutions subject to 

FinCEN’s general reporting and 

recordkeeping requirements, relatively 

few are exposed to CVC mixing and, 

additionally, proportionally few 

transactions per exposed financial 

institution covered under the proposed 

rule are likely to trigger the new 

recordkeeping and reporting 

requirements, of which fewer still may 

provide actionable information. 

However, any one reportable 

transaction, by nature of the underlying 

illicit and potentially dangerous activity 

it facilitates, could provide large 

benefits to FinCEN and law enforcement 

if identified, or, alternatively framed, 

could impose substantial costs and 

serious national security risks if 

unreported.90

1. Broad Economic Considerations 

At present, in the absence of an 

obligation to comply with special 

measure one requirements, a covered 

financial institution may determine that 

a financial transaction exposed, 

directly 91 or indirectly,92 to CVC 

mixing bears indicia of illicit activity. 

Given the potential link to illicit 

activity, this financial institution might 

file a SAR in compliance with existing 

BSA requirements. However, there are a 

number of potential reasons why any 

one individual institution may not file 

such a report, including that in terms of 

economic fundamentals, such reporting 

may not be privately optimal. 

Consequently, the absence of the 

proposed special measure one reporting 

requirement might naturally result in 

systematic underreporting of CVC 

mixing-related suspicious activity, 

particularly when the exposure to CVC 

mixing does not involve a CVC mixer. 

As discussed above, preliminary 

evidence suggests that this 

underreporting occurs.93

In terms of economic fundamentals, 

reporting on transactions exposed to 

CVC mixing produces a positive 

externality insofar as the reporting 

entity incurs expenses in connection 

with such reporting that are not directly, 

fully compensated. As such, the 

marginal social benefit of reporting 

exceeds the private costs. Consequently, 

in the absence of imposing a social 

(compliance-related) cost to nonreporting, the entity-specific 

equilibrium level of reporting will 

always be less than the social optimum. 

Furthermore, from a microeconomic- or 

a more industrial-organization-level of 

analysis, there are competitive reasons 

why, absent a uniform reporting 

requirement, no single covered financial 

institution that knows, suspects, or has 

reason to suspect CVC mixing would 

benefit from competing lower on the 

perceived level of quality in privacy. In 

such a setting, achieving the socially 

optimal level of reporting would again 

be unobtainable in the absence of a 

policy intervention (such as the 

proposed reporting and recordkeeping 

requirements). 

In this proposal, FinCEN is mindful 

that certain unintended, responsive 

changes in behavior may reduce the 

efficacy of this rule or otherwise 

attenuate the intended net benefits by 

limiting the scope of benefits or by 

increasing the costs of compliance. 

Additionally, the attendant costs and 

benefits per reported transaction may 

not be uniformly distributed across the 

affected covered financial institutions. 

There may also be broader 

programmatic costs or repercussions to: 

(1) the specific framing of CVC mixing 

and CVC mixers as proposed; 94 (2) the 

framing of CVC mixing activity as 

categorically foreign-state-operated, 

-located, or otherwise -adjacent; (3) the 

reporting and recordkeeping 

requirements being applicable to 

domestic financial institutions only; and 

(4) allowing an in-the-course-ofbusiness exemption to covered financial 

institutions, that each remain 

unquantified in the following impact 

analysis. Nevertheless, FinCEN has 

made a studied 95 and advised 96

determination that these considerations 

are outweighed by the primary money 

laundering concern that animates this 

proposal and are therefore not further 

incorporated in the subsequent 

discussion. 


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97See specifically E.O. 12866 Section 1(a) (‘‘In 

deciding whether and how to regulate, agencies 

should assess all costs and benefits of available 

regulatory alternatives, including the alternative of 

not regulating.’’). 

98See, e.g., supra Section VII.E. 

99See discussion supra Section VI.A.4; see also 

proposed amendment 31 CFR 1010.662(a)(4) infra 

Section IX. 100Numbers presented here may differ slightly 

from those presented in other, concurrent agency 

rulemaking because estimates in this analysis are 

rounded to the nearest ten for ease of aggregation. 

Such differences are not expected to be 

economically meaningful. 

101For the full list of non-exclusive subcategories 

a money services business may use to self-identify 

when submitting a registration see msb.fincen.gov/ 

definitions/msbKey.php. 

2. Institutional Baseline and Affected 

Parties 

In proposing this rule, FinCEN 

considered the incremental impacts of 

imposing special measure one relative 

to the current state of the affected 

markets and their participants. This 

baseline analysis of the parties that 

would be affected by the proposed rule, 

their current obligations, and common 

activities satisfies certain analytical best 

practices 97 by detailing the implied 

alternative of not pursuing the 

proposed, or any other, regulatory 

action. This baseline also forms the 

counterfactual against which the 

quantifiable effects of the rule are 

measured; therefore, substantive errors 

in or omissions of relevant data, facts, 

or other information may affect the 

conclusions formed regarding the 

general and/or economically significant 

impacts of the rule. Additionally, 

because it is unclear that the imposition 

of special measure one would, 

independently, alter the registration and 

compliance choices already made by 

such affected parties, quantitative 

portions of the subsequent analysis have 

not attempted to estimate the number of, 

or magnitude of effects on, unregistered 

or otherwise non-compliant entities that 

FinCEN qualitatively might expect to be 

affected by the rule. Because both these 

considerations may have first-order 

effects on the expected magnitude of 

certain outcomes, the public is invited 

to provide further insights or 

information—particularly, data or 

quantitative studies—that could 

contribute to a more precise or more 

accurate estimation of impact.98

(i) Baseline of Affected Parties 

(A) Covered Financial Institutions 

The parties expected to comply with 

the special measure one include any 

and all domestic covered financial 

institutions as defined in 31 CFR 

1010.100(t).99 Table 1 (below) reports an 

annual maximum of potentially affected 

entities based on FinCEN’s most recent 

estimates of the total number of entities 

that meet the respective regulatory 

definitions.100 Estimates of potentially 

affected money services businesses by 

subcategories as defined in 31 CFR 

1010.100(ff) are intended to aid in 

subsequent discussion, which details 

our assumptions about differences in 

expected compliance burdens by group. 

Estimates in parentheses reflect the total 

number of registered money services 

businesses that self-identified their 

business by the given service 

subcategory as defined in 31 CFR 

1010.100(ff), among others.101 Money 

services business subcategory estimates 

outside parentheses represent the 

number of entities that self-identified as 

registering (and reporting) singularly 

due to the requirements for that 

subcategory. 

TABLE 1—ESTIMATES OF AFFECTED FINANCIAL INSTITUTIONS BY TYPE

Financial institution type a Number of 

entities 

Bank b ............................................................................................................................................................................................... c 9,850 

Broker/Dealer in Securities d ............................................................................................................................................................ e 3,540 

Money Services Business f .............................................................................................................................................................. g 25,710 

Dealer in Foreign Exchange h .......................................................................................................................................................... i 190 (3,000) 

Check Casherj ................................................................................................................................................................................. k 5,960 (21,970) 

Issuer/Seller of Traveler’s Checks/Money Orders l ......................................................................................................................... m 380 

Provider of Prepaid Access n ........................................................................................................................................................... o 20 (130) 

Seller of Prepaid Access p ............................................................................................................................................................... q 40 (2,220) 

U.S. Postal Service r ........................................................................................................................................................................ s 0 

Money Transmittert ......................................................................................................................................................................... u 450 (16,460) 

Telegraph Company v ...................................................................................................................................................................... w 0 

Casino x ............................................................................................................................................................................................ y 990 

Card Club z ....................................................................................................................................................................................... aa 270 

Person subject to supervision by any State or Federal Bank Supervisory Authority bb ................................................................. cc N/A 

Futures Commission Merchant dd .................................................................................................................................................... ee 60 

Introducing Broker in Commodities ff ............................................................................................................................................... gg 970 

Mutual Fund hh ................................................................................................................................................................................. ii 1,380 

aAs typographically grouped in 31 CFR X 1010.100(t) and (ff), respectively. 

bSee 31 CFR 1010.100(t)(1); see also 31 CFR 1010.100(d). c Counts of certain types of banks, savings associations, thrifts, and trust companies are from Q1 2023 Federal Financial Institutions Examination Council (FFIEC) Call Report data, available at https://cdr.ffiec.gov/public/pws/downloadbulkdata.aspx. Data for institutions that are not insured, are insured under non-FDIC deposit insurance regimes, or do not have a Federal functional regulator are from the FDIC’s Research Information System, available at https://www.fdic.gov/foia/ris/index.html. Credit union data are from the NCUA for Q1 2023, available at https://

www.ncua.gov/analysis/credit-union-corporate-call-report-data. d 31 CFR 1010.100(t)(2). 

eAccording to the SEC, the number of brokers or dealers in securities for the fiscal year 2022 is 3,538. See Securities and Exchange Commission, Fiscal Year 2024 Congressional Budget Justification, p. 32, available at https://www.sec.gov/files/fy-2024-congressional-budget-justification_

final-3-10.pdf. f 31 CFR 1010.100(t)(3). 

gFrom FinCEN’s publicly available MSB data (https://www.fincen.gov/msb-registrant-search) as of September 1, 2023. h 31 CFR 1010.100(ff)(1). 

iValue in parentheses reflects all entries in data downloaded from https://www.fincen.gov/msb-registrant-search on August 1, 2023, including 

MSB Activities key 415. Alternative value reflects entries with exclusively key 415. 

j 31 CFR 1010.100(ff)(2). 

kValue in parentheses reflects all entries in data downloaded from https://www.fincen.gov/msb-registrant-search on August 1, 2023, including 

MSB Activities key 408. Alternative value reflects entries with exclusively key 408. 


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102 31 CFR 1010.100(bbb)(1). 103See discussion supra Section VI.A.5; see also 

proposed amendment 31 CFR 1010.662(a)(5) infra 

Section IX. 

104See discussion of expected economic effects 

on covered financial institutions infra Section 

VIII.A.4. 

105FinCEN is requesting comment on the 

reasonable bases for this expectation. See requests 

for comment supra Section VII.A and Section VII.E. 

106 In this section, FinCEN uses the term ‘CVC 

mixer’ as used in common parlance, noting this 

may commonly be understood to refer to only a 

proper subset of the entities/parties that would 

meet the definition of ‘CVC mixer’ as defined in this 

proposed rule. See discussion supra Section 

Continued 

l 31 CFR 10101.100(ff)(3). 

m Value reflects all entries in data downloaded from https://www.fincen.gov/msb-registrant-search on August 1, 2023 with, exclusively, one of 

the MSB Activities keys 401 (Issuer of traveler’s checks), 402 (Seller of traveler’s checks), 404 (Issuer of money orders), or 405(Seller of money 

orders). Because of the numerous (134) alternative combinations of at least one of the 4 keys with at least one of the other three keys and, in 

some cases, other keys as self-reported by registrants, no suitable alternative combination of key values could be determined as most appropriately and uniquely representative in light of concerns about multiplicative counting of affected parties. FinCEN estimates therefore default to 

the upper bound of all MSB registrants for this category of parties collectively incurring a regulatory compliance burden. n 31 CFR 1010.100(ff)(7)(i)–(ii). 

oValue in parentheses reflects all entries in data downloaded from https://www.fincen.gov/msb-registrant-search on August 1, 2023 including 

MSB Activities key 414(Provider of prepaid access). Alternative value reflects entries with exclusively key 414. p 31 CFR 1010.100(ff)(4)(i)–(iii). 

qValue in parentheses reflects all entries in data downloaded from https://www.fincen.gov/msb-registrant-search including MSB Activities key 

413. Alternative value reflects entries with exclusively key 413. r 31 CFR 1010.100(ff)(6). 

sFinCEN does not expect the U.S. Postal Service, as defined in 31 CFR 1010.100(ff)(6) to incur any recordkeeping or reporting obligations in 

connection with this rule. t 31 CFR 1010.100(ff)(5). 

uValue in parentheses reflects all entries in data downloaded from https://www.fincen.gov/msb-registrant-search including MSB Activities key 

409. Alternative value reflects entries with exclusively key 409. v 31 CFR 1010.100(t)(4). 

w As an estimate of uniquely registered, potentially affected entities, FinCEN expects this category to contain no additional persons or organizations not already included in other counts, particularly as money transmitters. x 31 CFR 1010.100(t)(5)(i)–(iii). 

yAccording to the American Gaming Association (AGA), there are 468 commercial casinos and 523 tribal casinos as of Dec. 31, 2022. See 

American Gaming Association, State of the States: annual report, May 2023, available at https://www.americangaming.org/wp-content/uploads/ 

2023/05/AGA-State-of-the-States-2023.pdf p. 16. z 31 CFR 1010.100(t)(6)(i)–(ii). 

aaAccording to the American Gaming Association (AGA), there are 266 card rooms as of Dec. 31, 2022. bb 31 CFR 1010.100(t)(7). cc It is unclear to FinCEN at this time whether any entities exist in this category that for purposes of being counted towards unique affected 

parties incurring burdens associated with the rule, if adopted as proposed, are not already captured by concurrent status in another category of 

financial institution under the 31 CFR 1010.100(t) definition. To the extent that additional data can better inform this estimate, public comment is 

invited. dd 31 CFR 1010.100(t)(8). eeThere are 60 futures commission merchants as of June 30, 2023, according to the CFTC website. See Commodity Futures Trading Commission, Financial Data for FCMs, available at https://www.cftc.gov/MarketReports/financialfcmdata/index.htm. ff 31 CFR 1010.100(t)(9). 

ggAccording to CFTC, there are 969 introducing brokers in commodities as of April 30, 2023. hh 31 CFR 1010.100(t)(10). iiAccording to the SEC, as of December 2022 (including filings made through Jan 20, 2023) there are 1,378 open-end registered investment 

companies that report on Form N–CEN. 

Based on these estimates, it is 

possible that up to approximately 

42,800 covered financial institutions 

could incur new recordkeeping and 

reporting costs in complying with 

special measure one. However, the 

extent to which any of these institutions 

is expected to be economically impacted 

is limited insofar as they would need to 

engage in transactions 102 that involve 

CVC, and thereby the possibility of CVC 

mixing. This prerequisite 103 (that a 

transaction be in CVC) is expected to 

preclude many entities from 

experiencing any significant economic 

effects from the rule.104 For example, 

FinCEN does not anticipate any direct 

effects to the U.S. Postal Service or to 

any registered telegraph company. 

Further, FinCEN analysis of public and 

non-public sources of information 

suggests that, categorically, domestic 

mutual funds, casinos, and card clubs 

have low exposure to CVC transactions. 

For the same reasons, money services 

businesses that provide services 

exclusively in one or more of the 

following subcategories are not expected 

to experience any substantial change to 

compliance burdens: dealer in foreign 

exchange, check casher, issuer/seller of 

traveler’s checks or money orders, 

provider of prepaid access, and seller of 

prepaid access. Thus, FinCEN expects 

approximately 9,300 fewer than the total 

estimate of potentially affected entities 

to reasonably anticipate any noticeable 

effect. 

On the other hand, the categories of 

affected parties that include the largest 

proportion of VASPs are expected to 

face the highest levels of potential 

exposure to CVC mixing. These entities 

are most concentrated in the money 

transmitter subcategory of money 

services businesses and futures 

commission merchants. In each case, 

these VASPs are a proper subset of their 

respective groups, and while they are 

expected to be the most directly affected 

by the rule because they have the 

highest exposure, the incremental 

burden of the rule is expected to be 

lowest for these entities because it 

imposes the least adaptation from 

current compliance practices and 

processes. 

The covered financial institutions that 

are expected to face the greatest 

incremental burden as a consequence of 

the proposed recordkeeping and 

reporting requirements would be those 

with both higher likelihoods of being 

exposed to CVC mixing and lower 

tailoring of existing compliance 

programs because, for instance, virtual 

asset service provision has not 

historically been integral to the entity’s 

core business function or model. 

FinCEN expects that this may 

characterize certain banks, or persons 

subject to supervision by a state or 

federal bank supervisory authority, 

broker/dealers, and introducing brokers 

in commodities. However, as these 

types of financial institutions are 

already heavily regulated and typically 

already feature robust monitoring and 

compliance programs, even as they may 

face the largest incremental burden, this 

economic impact might still be low.105

(B) CVC Mixing Service Providers 106

While the proposed application of 

special measure one does not expressly 


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VII.A.3; see also proposed amendment 31 CFR 

1010.662(a)(2) infra Section IX. 

107At the time of this proposal, FinCEN observes 

no CVC mixers that meet either or both of these 

criteria. 

108 Including name (see proposed amendment 31 

CFR 1010.662(b)(1)(ii)(A) infra Section IX) and 

government issued (alpha)numeric identifier (see 

proposed amendment 31 CFR 1010.662(b)(1)(ii)(F) 

infra Section IX); see also discussion supra Section 

VI. 

109 Including a customer’s CVC wallet address 

(see proposed amendment 31 CFR 

1010.662(b)(1)(i)(E) infra Section IX), date of birth 

(see proposed amendment 31 CFR 

1010.662(b)(1)(ii)(B) infra Section IX), address (see 

proposed amendment 31 CFR 1010.662(b)(1)(ii)(C) 

infra Section IX), and email address (see proposed 

amendment 31 CFR 1010.662(b)(1)(ii)(D) infra 

Section IX); see also discussion supra Section VI. 

110See Section VI.B.1. 

111Chainalysis Report, On-Chain User 

Segmentation for Crypto Exchanges, June 22, 2023, 

available at https://www.chainalysis.com/blog/ 

crypto-exchanges-on-chain-user-segmentationguide/. 

112See discussion supra Section IV.A.3; see also 

supra note 58. 

113See discussion supra Section IV.A.3; see also 

Section VIII.A.1. 

114FinCEN considered costs here proportionally 

to the value of the information collected and 

reported in connection with illicit finance-related 

transactions. See discussion supra Section VIII.A; 

see also supra note 90. 

115FinCEN considered here the aggregate 

potential informational exposure, which depends 

jointly on (1) the quanta of personal information 

collected and reported and (2) the expected number 

of instances in which access to that personal 

information is granted in the course of a legitimate 

investigative or prosecutorial activity. 

116At present, it is unclear to FinCEN whether, 

in light of the proposed requirements, a covered 

financial institution would be more likely to treat 

these third party services as a substitute or a 

complement to in-house screening and riskmanagement activities. Therefore while there is an 

expected change to demand for these third party 

services, the direction of this change remains 

unsigned. 

impose requirements on CVC mixers 

that are not covered financial 

institutions or those able to rely on the 

proposed exemption,107 it is reasonable 

to expect that the relative attractiveness 

of engaging with CVC mixers or the 

number of those who avail themselves 

of CVC mixing services might be 

affected. As a baseline matter of market 

structure, the centralized mixing 

services industry is expected to be 

characterized by large network 

externalities: the value of a CVC mixer 

should increase as the number of users 

increases, because the greater the 

number of parties that use a particular 

CVC mixer, the easier it becomes for the 

mixer to anonymize each participant in 

a mixing transaction. This 

characterization is consistent with 

observable market behavior. Because 

network externalities generally reinforce 

high levels of market concentration, it 

may be reasonable to expect that the 

number of CVC mixers that can 

concurrently achieve and maintain a 

sustainable scale to continue operations 

is unlikely to grow. It may also imply 

that, to the extent that the demand for 

CVC mixing services remains relatively 

constant over time, in the event that any 

one CVC mixing service provider ceases 

to remain active, another active or new 

CVC mixer could greatly benefit from 

the subsequent increase in demand for 

its services. 

(C) Clients of Primary Affected Parties 

In the course of compliance with 

special measure one, covered financial 

institutions may be required to submit 

reports and retain records containing 

certain unique identifiers 108 and other 

personal information 109 of a party, or 

parties, to a CVC mixing-exposed 

transaction.110 Based on a recent 

report,111 this could affect more than 

300 million users of unhosted CVC 

wallets insofar as a user’s personal 

information may be reported if their 

wallet is deemed by a covered financial 

institution to be involved in a covered 

transaction. Because there is no 

restriction on the number of wallets an 

individual may have, this number may 

overestimate the number of unique 

individuals whose personal information 

may be required. To the extent that 

previously reported estimates 112

regarding the distribution of CVC mixer 

users by type—privacy-oriented versus 

abusers of anonymity—are usable for 

inference, special measure one could 

require the reporting of personal 

information in connection with up to 

approximately 66 (87) percent of CVC 

mixer deposits in the absence of any 

other identifiable connection to high 

risk (illicit) activity. 

FinCEN has weighed these 

considerations against the broader 

economic concern of systematic 

underreporting in the absence of special 

measure one requirements,113 and 

concluded that the associated costs to 

privacy-oriented clients of covered 

financial institutions and CVC mixers 

are small in both relative 114 and 

absolute 115 terms. Further, there is no 

reason to believe the required records 

and personal information contained 

therein would be subject to any greater 

risk of improper access, use, or exposure 

than any other record or report filed 

with a federal agency or maintained by 

a covered financial institution. 

(D) Other Affected Parties 

FinCEN further anticipates second 

order economic effects of the proposed 

rule on parties ancillary to transactions 

between covered financial institutions, 

CVC mixing service providers, and 

clients of either or both, such as 

counsel, advisors, external forensic 

firms, independent auditors, IT services, 

and other compliance facilitators or 

third-party service providers. In 

particular, FinCEN expects the proposed 

requirements may affect the demand for 

services by third party blockchain 

analytics companies.116 Such 

companies provide transaction 

screening and risk rating services to 

financial institutions that may hire them 

in lieu of, or to complement, similar 

functions performed in-house. Because 

of the specialized experience and 

expertise required to build a program, 

reporting in near real time, that not only 

monitors multiple blockchains, but also 

incorporates a multitude of additional 

data sources to enrich a given 

blockchain’s transaction- and 

transaction party-related information, 

few such companies exist and the 

market is consequently concentrated to 

fewer than ten main entities. 

Separately, because the proposed rule 

is limited in scope to only the mixing 

of CVC, to the extent that digital token 

mixing and its service providers are 

considered viable substitutes for CVC 

mixing or could otherwise be employed 

to obfuscate CVC mixing, the demand 

for token mixing and its service 

providers may increase as a 

consequence of adopting the rule as 

proposed. 

(ii) Regulatory and Market Baseline 

(A) Current Requirements 

The ten categories of financial 

institutions covered by the proposed 

rule, as defined in 31 CFR 1010.100(t) 

are expected to already be compliant 

with the required activities as outlined 

in 31 CFR 1020 (Banks), 1021 (Casinos 

and Card Clubs), 1022 (Money Service 

Businesses), 1023 (Brokers or Dealers in 

Securities), 1024 (Mutual Funds), and 

1026 (Futures Commission Merchants 

and Introducing Brokers in 

Commodities), as applicable. These 

rules include requirements for financial 

institutions to: (1) create and maintain 

compliance policies, procedures, and 

internal controls; (2) engage in customer 

identification verification; (3) file 

reports with FinCEN; (4) create and 

retain records; and (5) respond to law 

enforcement requests, and have guided 

financial institutions’ understanding of 

FinCEN’s expectations of compliant 

reporting and recordkeeping activity 

since before the advent of virtual 

currency. Where the original rules are 

silent on the application of, or 

compliance with, these requirements 

with respect to CVC, FinCEN and OFAC 


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117See FIN–2013–G001, Application of FinCEN’s 

Regulations to Persons Administering, Exchanging, 

or Using Virtual Currencies, Mar. 18, 2013, 

available at https://www.fincen.gov/sites/default/

files/guidance/FIN-2013-G001.pdf (2013 Guidance); 

see also FinCEN 2019 CVC Guidance. 

118See generally OFAC, Questions on Virtual 

Currency, available at https://ofac.treasury.gov/ 

faqs/topic/1626; see, specifically OFAC, Sanctions 

Compliance Guidance for the Virtual Currency 

Industry, Oct. 2021, available at https://

ofac.treasury.gov/media/913571/download?inline. 

119See, e.g., FinCEN, Financial Action Task Force 

Identifies Jurisdictions with Anti-Money Laundering 

and Combating the Financing of Terrorism and 

Counter-Proliferation Deficiencies, June 29, 2023, 

available at https://www.fincen.gov/news/newsreleases/financial-action-task-force-identifiesjurisdictions-anti-money-laundering-and-4; FIN– 

2021–A003 ‘‘Advisory on the Financial Action Task 

Force-Identified Jursdictions with Anti-Money 

Laundering and Combating the Financing of 

Terrorism and Counter-Proliferations Deficiencies’’ 

available at https://www.fincen.gov/sites/default/ 

files/advisory/2021-03-11/FATF%20February

%202021%20Advisory%20FINAL%20508.pdf. 

120This study incorporated both public and nonpublic data as well as certain proprietary and nonproprietary computer programs to analyze 

transactions occurring between calendar year 2010 

at the earliest (given that each exchange has a 

unique start date) and the date the study was 

concluded (August 3, 2023). 

121 Direct exposure refers to transactions where 

CVC is sent from one CVC wallet address to another 

CVC wallet address, without the use of an 

intermediary. For example, if a VASP received 

funds from—or sent funds to—a CVC mixer without 

first going through an intermediary, that VASP has 

direct exposure to CVC mixing. 

122 Indirect exposure refers to transactions where 

CVC is sent from a CVC wallet address through at 

least one other wallet address to arrive at the 

intended recipient. For example, if CVC was sent 

from a CVC mixer to a CVC wallet address and then 

to a VASP, that VASP has indirect exposure to CVC 

mixing. Similarly, if CVC sent from a VASP to a 

CVC wallet address was subsequently send to a 

CVC mixer, it would be indirectly exposed to CVC 

mixing. 

123See definition supra note 121. 124See definition supra note 122. 125FinCEN notes that the extent to which 

exclusive use of any of these tools (free or 

commercial software programs) would fully satisfy 

either existing reporting and recordkeeping 

requirements, or those imposed by the proposed 

special measure one, is a matter of facts and 

circumstances. 

126 Id. at note 121. 

127 Id. at note 122. 

128 Id. at 122. 

129 Id. ar 121. 

have historically provided successive, 

iterative guidance 117 and other 

information 118 that clarifies 

expectations with respect to required 

practices. Furthermore, FinCEN has 

historically issued advisories and press 

releases based on FATF guidance to 

financial institutions,119 including 

VASPs, concerning processes and legal 

obligations that apply to transactions 

involving high risk and sanctioned 

juridictions. 

Preliminarily, evidence suggests that 

at least some covered financial 

institutions have long anticipated and 

appreciated the applicability of SAR 

and currency transaction reporting 

requirements to transactions involving 

CVC: the first SAR including language 

specific to a CVC was filed thirteen 

years ago in 2010, predating FinCEN’s 

2013 Guidance, and the first SAR filed 

by a VASP, approximately two months 

after the 2013 Guidance was issued, is 

already a decade old. Since the issuance 

of that guidance, FinCEN has received 

CVC-related SARs from approximately 

4,500 distinct filers. As such, the 

reporting and recordkeeping 

requirements that would be introduced 

by the proposed rule may build 

incrementally onto an existing 

regulatory compliance framework, 

inclusive of CVC, that is well 

understood, and where a nontrivial 

proportion of covered financial 

institutions demonstrate willingness 

and ability to meet existing reporting 

and recordkeeping obligations. 

(B) Current Market Practices 

When assessing relevant baseline 

elements of current market practice 

against which to forecast the regulatory 

and economic impacts of special 

measure one requirements as proposed, 

FinCEN—in addition to the current 

regulatory requirements—also 

considered certain factors of current 

practices including: (1) the extent to 

which covered financial institutions are 

identifiably exposed to CVC mixing; and 

(2) the availability of reliable tools and 

methods with which to detect the kinds 

of CVC mixing exposure that would 

trigger the proposed reporting and 

recordkeeping requirements. 

As a component of this analysis, 

FinCEN conducted an independent 

historical review of CVC mixing 

exposure occurring in the ordinary 

course of business at the largest 

registered CVC exchanges from their 

respective first trade dates until 

present.120 As these are some of the 

affected covered financial institutions 

with highest expected exposure to CVC 

mixing, their relative volumes of CVC 

mixing-exposed transactions is likely to 

present a reasonable upper-bound on 

the proportion of currently identifiable 

transactions that could incur additional 

record-keeping and reporting 

requirements in connection with the 

imposition of the first special measure. 

This study found that during the period 

reviewed, mean (median) daily 

transaction volume with observable 

direct exposure 121 was approximately 

0.010 percent (0.009 percent), while 

mean (median) observable indirect 

exposure 122 was approximately 0.234 

percent (0.168 percent) of daily 

transaction volume. The analysis 

yielded comparable results when 

proportions were based on share of total 

transactions instead of U.S. Dollar value 

equivalent. It would therefore appear 

that, to the extent that future CVC 

mixing exposure is consistent with past 

and current trends, the number of 

transactions that would require 

reporting and recordkeeping as a unique 

consequence of adopting special 

measure one as proposed is extremely 

low in relative terms. 

FinCEN also reviewed the availability 

of tools, other than the use of third party 

blockchain analytics companies, that a 

financial institution currently has the 

option to employ to detect exposure to 

CVC mixing transactions in the course 

of complying with existing SAR and/or 

CTR related requirements. CVC mixing 

exposure can occur (directly 123 or 

indirectly 124) in the process of sending 

CVC to, or receiving CVC from, a 

covered financial institution (such as a 

CVC exchange) and can be detected via 

a range of free and paid commercial 

software programs.125 Free programs, 

such as common block explorers, can 

easily reveal direct 126 exposure to a 

CVC mixer if the CVC mixer 

infrastructure is relatively stable and 

well known, such as in the case of many 

Ethereum-based CVC mixers. 

Indirect 127 exposure may be also 

discoverable using these programs but 

might require supplementary manual 

investigative work to uncover. Paid 

commercial programs employ suites of 

heuristics to more comprehensively 

identify CVC mixers, and market 

themselves on their ability to 

automatically detect bi-directional 

indirect 128 and direct 129 exposure to 

CVC mixing activity for any blockchain 

address supported by the service. On 

blockchains supporting native smart 

contract capability, these automated 

attribution capabilities can be easily 

defeated if a user routes funds through 

token contracts or other digital asset 

entities providing on-chain exchange 

services. In such cases, analysts can still 

perform manual blockchain forensic 

tracing to identify the origin of funds. 

3. Description of the Proposed Reporting 

and Recordkeeping Requirements of the 

First Special Measure 

Imposing special measure one as 

proposed would introduce novel but, in 

many cases, incrementally modest 

additional recordkeeping and reporting 

obligations, requiring the collection and 

transmission of certain information in 

its possession when a covered financial 

institution knows, suspects, or has 

reason to suspect a transaction occurred 


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130See Section VI. See also Section IX. 

131See discussion supra Section VI.B.2; see also 

proposed amendment 31 CFR 1010.662(b)(2) infra 

Section IX. 

132 31 CFR 1010.430 

133See discussion supra Section VI.B.3; see also 

proposed amendment 31 CFR 1010.662(b)(3) infra 

Section IX. 

134See discussion supra Section VI.B.1(i); see 

also proposed amendment 31 CFR 

1010.662(b)(1)(i)(B) infra Section IX. 

135See discussion supra Section VI.B.1(i); see 

also proposed amendment 31 CFR 

1010.662(b)(1)(i)(A) infra Section IX. 

136 Id. 

137See discussion supra Section VI.B.1(i); see 

also proposed amendment 31 CFR 

1010.662(b)(1)(i)(C) infra Section IX. 

138See discussion supra Section VI.B.1(i); see 

also proposed amendment 31 CFR 

1010.662(b)(1)(i)(D) infra Section IX. 

139See discussion supra Section VI.B.1(i); see 

also proposed amendment 31 CFR 

1010.662(b)(1)(i)(F) infra Section IX. 

140See discussion supra Section VI.B.1(i); see 

also proposed amendment 31 CFR 

1010.662(b)(1)(i)(G) infra Section IX. 

141See discussion supra Section VI.B.1(i); see 

also proposed amendment 31 CFR 

1010.662(b)(1)(i)(H) infra Section IX. 

142See discussion supra Section VI.B.1(i); see 

also proposed amendment 31 CFR 

1010.662(b)(1)(i)(I) infra Section IX. 

143See discussion supra Section VI.B.1(ii); see 

also proposed amendment 31 CFR 

1010.662(b)(1)(ii)(A) infra Section IX. 

144See discussion supra Section VI.B.1(ii); see 

also proposed amendment 31 CFR 

1010.662(b)(1)(ii)(B) infra Section IX. 

145See discussion supra Section VI.B.1(ii); see 

also proposed amendment 31 CFR 

1010.662(b)(1)(ii)(C) infra Section IX. 

146See discussion supra Section VI.B.1(i); see 

also proposed amendment 31 CFR 

1010.662(b)(1)(i)(E) infra Section IX. 

147See discussion supra Section VI.B.1(ii); see 

also proposed amendment 31 CFR 

1010.662(b)(1)(ii)(D) infra Section IX. 

148See discussion supra Section VI.B.1(ii); see 

also proposed amendment 31 CFR 

1010.662(b)(1)(ii)(E) infra Section IX. 

149See discussion supra Section VI.B.1(ii); see 

also proposed amendment 31 CFR 

1010.662(b)(1)(ii)(F) infra Section IX. 

150See discussion of covered financial 

transactions (clarifying the definitional requirement 

that a reportable transaction must occur in CVC) 

supra Section VI.A.4, 

151See discussion of anticipated differential 

effects supra Section VIII.A.2(i)(A); see also 

discussion of current market practices supra 

Section VIII.A.2(ii)(B). 

152 Id. at note 122. 

153See discussion of existing BSA requirements 

regarding identification and monitoring of financial 

transaction associations with foreign jurisdictions 

and geographic locations supra Section VI.A.5. See 

also discussion of FinCEN requirements under 

FATF guidance supra Section VIII.A.2(ii)(A). 

154 Id. at note 121. 

155 Id. at note 122. 

156 Id. 

157See discussion supra Section VIII.A.2(i)(D). 

that involved the use of CVC mixing 

within or involving a jurisdiction 

outside the United States.130 The 

affected institution at which a covered 

transaction is conducted or attempted 

would need to collect required 

information about the covered 

transaction and, within 30 days of 

initial detection of a covered 

transaction, provide a report to FinCEN 

containing as much of the reportable 

required information as available to the 

affected institution—via electronic filing 

or other agency-prescribed manner.131

Additionally, for a specified period of 

time (five years 132) after filing its report, 

each covered financial institution would 

engage in new recordkeeping activities 

because it would need to document its 

compliance with the filing procedures 

and the reporting requirements by: (1) 

maintaining a copy of any records 

related to CVC mixing transactions they 

have filed; and (2) obtaining and 

recording copies of documentation 

relating to compliance with the 

regulation.133

The required information would 

identify and describe certain unique 

features and characteristics of both the 

reportable covered transaction and the 

customer associated with the covered 

transaction. The required informational 

components concerning the covered 

transaction pertain to the CVC when 

transferred (currency type,134

amount,135 and U.S.-dollar 

equivalent 136), the CVC mixer 

(identity 137 and/or wallet address 138), 

and the transaction (hash,139 date,140 IP 

addresses and timestamps,141 and 

narrative description 142), while the 

required informational components 

concerning the associated customer 

include name 143, date of birth 144, 

addresses (physical,145 CVC wallet,146

and associated email 147), phone 

number,148 and an entity-specific 

government-issued (alpha)numeric 

identifier.149

4. Expected Economic Effects on 

Covered Financial Institutions 

As discussed above, the parties 

expected to incur an economic burden 

as they comply with the first special 

measure include all financial 

institutions as defined in 31 CFR 

1010.100(t) insofar as they engage in 

CVC transactions that could be exposed 

to CVC mixing within or involving a 

jurisdiction outside the United 

States.150 In light of FinCEN’s review of 

the anticipated differential effects on 

covered financial institutions due to 

variations in both expected exposure 

and preexisting monitoring and 

detection infrastructure, as well as 

FinCEN’s assessment of current market 

practices,151 FinCEN expects that the 

largest portion of the novel costs 

incurred in complying with the first 

special measure will be associated with 

indirect 152 exposure to CVC mixing at 

financial institutions not currently 

operating primarily in the provision of 

virtual asset services and cases where 

the jurisdictions involved or under 

which CVC mixing occurs are 

particularly difficult to ascertain. 

However, it is unclear whether this 

proportion of expected novel 

compliance costs would itself be large 

because it would be difficult to uniquely 

identify expenses incurred distinctly as 

a function of special measure one 

compliance from expenses incurred in 

the course of pre-existing BSA 

requirements,153 as both would largely 

rely on use of the same activities, 

technology, and services. 

It is also unclear whether future 

relative distributions of direct 154 versus 

indirect 155 exposure would continue in 

the same pattern as historically 

observed, but at present do not have 

empirical evidence that would suggest 

substantial changes are imminent. 

Detecting indirect 156 exposure may 

require certain financial institutions to 

newly obtain commercial programs and/ 

or services to facilitate compliance with 

the rule as proposed as CVC mixing 

practices continue to evolve. The cost of 

these services, based on current market 

prices, could run in excess of tens of 

thousands of dollars per license and 

would require analysts to remain 

continually engaged in blockchain 

tracing to stay up to date with emerging 

trends in the rapidly developing digital 

asset industry. It is unclear at this time 

whether financial institutions or third 

party service providers would incur the 

majority of costs associated with 

analytical updating as CVC mixing 

practices evolve, or the extent to which 

these cost increases may be passed 

through to a financial institution’s 

customers. It is also unclear how these 

compliance-related costs might scale 

with the proposed increased reporting 

and recordkeeping requirements 

because it requires speculation about 

how the potential for new entrants to 

the third party mixing detection service 

market and/or technological 

advancements (that would not occur but 

for the proposed compliance obligations 

making them economically attractive 

investments) would affect costs.157

FinCEN acknowledges to that to the 

extent that a covered transaction might 

require the filing of both a SAR and 

special measure one related report, 

concurrent satisfaction of both sets of 

reporting and recordkeeping 

requirements might result in some 

duplicative costs related to any overlap. 


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158See Sections VII.A. and VII.E. 

159See discussion supra Section V.E. 

160 31 U.S.C. 5318A(b)(3) 

161 31 U.S.C. 5318A(b)(4) 

162 31 U.S.C. 5318(b)(5) 

163See Section V.E. 

164 5 U.S.C. 603(a). 

165See discussion supra Section VIII.A.2–3. 

To the extent that the forgoing 

analysis has failed to take into 

consideration any material facts, data, 

circumstances, or other considerations 

that, had they been considered, would 

have substantially altered the balance of 

costs and benefits attendant to the 

proposed special measure(s), FinCEN 

has invited public comment.158

5. Economic Consideration of Available 

Regulatory Alternatives 

FinCEN has considered a number of 

alternative policies that could have been 

proposed to accomplish the same 

objectives.159 These policies included 

the selection of one, or a combination 

of, other special measure(s) or, 

alternatively the selection of the same 

special measure with a narrower scope. 

(i) Special Measure Two: Beneficial 

Ownership Information Requirements 

Instead of recordkeeping and 

reporting requirements, FinCEN could 

have pursued the application of special 

measure two, which would have 

required domestic financial institutions 

and agencies to obtain and retain the 

beneficial ownership information of any 

account at a depository institution 

opened or maintained by a foreign 

person or their representative that the 

institution or agency knows, suspects, 

or has reason to suspect is involved in 

a CVC mixing transaction. While this 

information about beneficial ownership 

related to CVC mixing transaction 

participants could be similar to certain 

elements required under the current 

proposal and hence of comparable 

value, the alternative focus of special 

measure two on the ownership of 

accounts instead of the nature of 

transactions is expected to impose 

similar compliance costs with lower 

attendant benefits both in quantity of 

useful information obtained and in 

scope of financial institutions to whom 

the information-gathering requirements 

would apply. As such, the imposition of 

special measure two instead of special 

measure one would be strictly less 

efficient in addressing the class of 

transactions of primary money 

laundering concern. 

(ii) Special Measures Three Through 

Five 

Alternatively, FinCEN could have 

proposed to impose special measure 

three, four, five, or some combination 

thereof. Special measures three and four 

would simply require domestic 

financial institutions and agencies to 

obtain certain identifying information 

regarding the customer or their 

representative as a condition to open or 

maintain a payable-through 160 or 

correspondent 161 account, respectively, 

if the financial institution or agency 

knows, suspects, or has reason to 

suspect the account and transactions 

conducted through it involve CVC 

mixing. More severely, special measure 

five could have imposed prohibitions or 

conditions 162 on the opening or 

maintenance of a correspondent or 

payable-through account if the domestic 

covered financial institution or agency 

knows, suspects, or has reason to 

suspect that transactions conducted 

through the account involve CVC 

mixing. 

Because the expected results of 

imposing special measures three, four, 

or both, absent special measure five 

would likely be similar to expectations 

with respect to special measure two, 

that analysis is not repeated here. 

Instead, an approach that would impose 

special measures three or four, or both, 

in conjunction with special measure 

five is considered. As discussed 

above,163 FinCEN determined that these 

special measures are less relevant in the 

context of CVC transactions, including 

those that involve CVC mixing, as CVC 

transactions are conducted outside of 

the traditional banking system. 

Therefore, expected benefits would also 

be lower than under proposed special 

measure one requirements due to the 

limited intersection between 

transactions in CVC and the foreign use 

of domestic traditional bank accounts. 

Given these considerations, this 

alternative approach was rejected. 

(iii) Alternate Specification of Special 

Measure One: Specified Terror FinanceRelated Actors and Transactions Only 

Finally, FinCEN considered an 

alternative that would employ the same 

special measure but with greater 

specificity of covered transactions that 

would limit the scope of interest in CVC 

mixing-exposed transactions to only 

those identifiably sponsored by or 

affiliated with terror finance by Hamas, 

ISIS, or the DPRK. This alternative is 

expected to incur higher costs related to, 

among other things, the additional 

burden a financial institution would 

have in making a determination about a 

transaction’s connection to an 

identifiable source or affiliate of the 

applicable terrorist organization. It 

would also limit the potential 

informational benefits of the measure by 

discarding similar reports and records 

that may be of equal or greater value to 

investigating, prosecuting, or 

disincentivizing CVC mixing supported 

illicit activities but lack an identifiable 

connection to Hamas, ISIS, or the DPRK. 

Because of these dual inefficiencies, 

special measure one as proposed is 

considered to strike a more appriopriate 

balance. 

B. Executive Orders 

Executive Orders 12866, 13563, and 

14094 direct agencies to assess costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. 

It has been determined that this 

proposed rule is not a significant 

regulatory action under section 3(f) of 

Executive Order 12866, as amended. 

However, in light of the nature of this 

proposed rule, FinCEN has prepared an 

economic analysis to help inform its 

consideration of the impacts of the 

proposed rule. 

C. Regulatory Flexibility Act 

When an agency issues a rulemaking 

proposal, the Regulatory Flexibility Act 

(RFA) requires the agency to ‘‘prepare 

and make available for public comment 

an initial regulatory flexibility 

analysis’’(IRFA) that will ‘‘describe the 

impact of the proposed rule on small 

entities.’’ 164 However, Section 605 of 

the RFA allows an agency to certify a 

rule, in lieu of preparing an analysis, if 

the proposed rulemaking is not 

expected to have a significant economic 

impact on a substantial number of small 

entities. 

1. Estimate of the Number of Small 

Entities to Whom the Proposed Rule 

Will Apply 

The reporting and recordkeeping 

requirements proposed under the first 

special measure requires certain covered 

financial institutions to report to 

FinCEN information associated with 

transactions or attempted transactions 

involving CVC mixing and maintain 

certain related records for a fixed period 

of time.165 Table 2 (below) presents 

FinCEN estimates of the number of 

affected institutions that may be deemed 


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166See U.S. Small Business Administration’s 

Table of Size Standards, available at https://

www.sba.gov/sites/sbagov/files/2023-06/Table%20

of%20Size%20Standards_

Effective%20March%2017%2C%20

2023%20%282%29.pdf. 

167See U.S. Census Bureau, U.S. & states, NAICS, 

detailed employment sizes (U.S., 6-digit and states, 

NAICS sectors) (2017), available at https://

www.census.gov/data/tables/2017/econ/susb/2017- 

susb-annual.html. The Census survey documents 

the number of firms and establishments, 

employment numbers, and annual payroll by State, 

industry, and enterprise every year. Receipts data, 

which FinCEN uses as a proxy for revenues, is 

available only once every five years, with 2017 

being the most recent survey year with receipt data. 

small entities. To identify whether a 

financial institution is small, FinCEN 

generally uses the Small Business 

Administration’s (SBA) latest annual 

size standards for small entities in a 

given industry, unless otherwise 

noted.166 FinCEN also uses the U.S. 

Census Bureau’s publicly available 2017 

Statistics of U.S. Businesses survey data 

(Census survey data).167 FinCEN applies 

SBA size standards to the corresponding 

industry’s receipts in the 2017 Census 

survey data and determines what 

proportion of a given industry is 

deemed small, on average. FinCEN 

considers a financial institution to be 

small if it has total annual receipts less 

than the annual SBA small entity size 

standard for the financial institution’s 

industry. FinCEN applies these 

estimated proportions to FinCEN’s 

current financial institution counts for 

brokers/dealers in securities, money 

services businesses, casinos, card clubs, 

futures commission merchants, 

introducing brokers in commodities, 

and mutual funds to determine the 

proportion of current small financial 

institutions in those industries. 

Numbers have been rounded as in 

Section VIII.A.2(i)(A) to facilitate 

aggregation. 

TABLE 2—ESTIMATES OF SMALL AFFECTED FINANCIAL INSTITUTIONS BY TYPE

Financial institution type a Number of 

entities 

Bank b ............................................................................................................................................................................................... c 7,970 

Broker/Dealer in Securities d ............................................................................................................................................................ e 3,450 

Money Services Businesses f .......................................................................................................................................................... g 24,010 

Telegraph Company h ...................................................................................................................................................................... i 0 

Casino j ............................................................................................................................................................................................ k 930 

Card Club l ....................................................................................................................................................................................... m 250 

Person subject to supervision by any State or Federal Bank Supervisory Authority n ................................................................... o N/A 

Futures Commission Merchant p ..................................................................................................................................................... q 56 

Introducing Broker in Commodities r ................................................................................................................................................ s 900 

Mutual Fund t ................................................................................................................................................................................... u 1,380 

aAs typographically grouped in 31 CFR 1010.100(t). 

bSee 31 CFR 1010.100(t)(1); see also 31 CFR 1010.100(d). The SBA currently defines small entity size standards for banks as follows: less 

than $850 million in total assets for commercial banks, savings institutions, and credit unions. c Counts of certain types of banks, savings associations, thrifts, trust companies are from Q1 2023 Federal Financial Institutions Examination 

Council (FFIEC) Call Report data, available a https://cdr.ffiec.gov/public/pws/downloadbulkdata.aspx. Data for institutions that are not insured, are 

insured under non-FDIC deposit insurance regimes, or do not have a Federal functional regulator are from the FDIC’s Research Information System, available at https://www.fdic.gov/foia/ris/index.html. Credit union data are from the NCUA for Q1 2023, available at https://www.ncua.gov/ 

analysis/credit-union-corporate-call-report-data. Because data accessed through FFIEC and NCUA Call Report data provides information about 

asset size for banks, trusts, savings and loans, credit unions, etc., FinCEN is able to directly determine how many banks and credit unions are 

small by SBA size standards. Because the Call Report data does not include institutions that are not insured, are insured under non-FDIC deposit insurance regimes, or that do not have a Federal financial regulator, FinCEN assumes that all such entities listed in the FDIC’s Research 

Information System data are small, unless they are controlled by a holding company that does not meet the SBA’s definition of a small entity, 

and includes them in the count of small banks. Consistent with the SBA’s General Principles of Affiliation, 13 CFR 121.103(a), FinCEN aggregates the assets of affiliated financial institutions using FFIEC financial data reported by bank holding companies on forms Y–9C, Y–9LP, and Y– 

9SP, available at https://www.ffiec.gov/npw/FinancialReport/FinancialDataDownload, and ownership data, available at https://www.ffiec.gov/npw/

FinancialReport/DataDownload, when determining if an institution should be classified as small. FinCEN uses four quarters of data reported by 

holding companies, banks, and credit unions because a ‘‘financial institution’s assets are determined by averaging the assets reported on its four 

quarterly financial statements for the preceding year.’’ See U.S. Small Business Administration’s Table of Size Standards, p. 38 n.8, https://

www.sba.gov/sites/sbagov/files/2023-06/Table%20of%20Size%20Standards_Effective%20March%2017%2C%202023%20%282%29.pdf. FinCEN 

recognizes that using SBA size standards to identify small credit unions differs from the size standards applied by the NCUA. However, for consistency in this analysis, FinCEN applies the SBA-defined size standards. d 31 CFR 1010.100(t)(2). 

eThe SBA currently defines small entity size standards for investment banking and securities intermediation as less than $47 million in average annual receipts. See paragraph preceding table for details of analysis. f 31 CFR 1010.100(t)(3). 

gThe SBA currently defines small entity size standards for financial transactions processing, reserve, and clearinghouse activities as less than 

$47 million in average annual receipts. See paragraph preceding table for details of analysis. h 31 CFR 1010.100(t)(4). 

iAs an estimate of uniquely registered, potentially affected small entities, FinCEN expect this category to contain no additional persons or organizations not already included in other counts, particularly as money transmitters. 

j 31 CFR 1010.100(t)(5)(i)–(iii). 

kThe SBA currently defines small entity size standards for casinos as less than $34 million in average annual receipts. See paragraph preceding table for details of analysis. l 31 CFR 1010.100(t)(6)(i)–(ii). 

m The SBA currently defines small entity size standards for other gambling industries as less than $40 million in average annual receipts. See 

paragraph preceding table for details of analysis. n 31 CFR 1010.100(t)(7). 

o It is unclear to FinCEN at this time whether any entities exist in this category that for purposes of being counted towards unique affected parties incurring burdens associated with the rule, if adopted as proposed, are not already captured by concurrent status in another category of financial institution under the 31 CFR 1010.100(t) definition. To the extent that additional data can better inform this estimate, public comment is 

invited. p 31 CFR 1010.100(t)(8). 

qThe SBA currently defines small entity size standards for commodity contracts intermediation as less than $47 million in average annual receipts. See paragraph preceding table for details of analysis. r 31 CFR 1010.100(t)(9). 

sSupra note q. 


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168See discussion supra Section VIII.A.2(i)(A). 169See, e.g., discussion supra Section 

VIII.A.2(i)(D). 

170See Section VII.E. 

171Public Law 104–4 (March 22, 1995). 

172 Id. 

173 Id. 

174See Section VIII.A.4. 

175The Unfunded Mandates Reform Act requires 

an assessment of mandates that will result in an 

annual expenditure of $100 million or more, 

adjusted for inflation. The U.S. Bureau of Economic 

Analysis reports the annual value of the gross 

domestic product (GDP) deflator in 1995, the year 

of the Unfunded Mandates Reform Act, as 71.823, 

and as 127.224 in 2022. See U.S. Bureau of 

Economic Analysis, ‘‘Table 1.1.9. Implicit Price 

Deflators for Gross Domestic Product’’ (accessed 

Friday, June 2, 2023) available at https://

apps.bea.gov/iTable/?reqid=19&step=3&

isuri=1&1921=survey&1903=13t. Thus, the inflation 

adjusted estimate for $100 million is 127.224/ 

71.823 × 100 = $177 million. 

176See generally, discussion supra Section VIII.A; 

see specifically, discussion of alternatives 

considered supra Section V.E. and Section VIII.A.5. 

177 44 U.S.C. 3507(d). 

178 31 CFR 1010.662(b)(2). 

t 31 CFR 1010.100(t)(10). 

uThe SBA currently defines small entity size standards for open-end investment funds as less than $40 million in average annual receipts. See 

paragraph preceding table for details of analysis. 

2. Expectation of Impact 

For the reasons discussed above in 

Section VIII.A, FinCEN does not expect 

all potentially affected financial 

institutions to be equally affected by the 

proposed rule.168 These expectations of 

differential effects are of first-order 

relevance because, for the purposes of 

the IRFA, a rulemaking must be jointly 

impactful in both its breadth 

(substantial number) and depth 

(significant economic impact) on small 

entities to require additional, tailored 

analysis. FinCEN’s categorical analysis 

of the financial institutions defined in 

31 CFR 1010.100(t) does not support the 

need for an initial regulatory flexibility 

analysis because it determined that, in 

cases where a substantial number of 

financial institutions are small entities, 

the economic impact of the rule is not 

expected to be significant. Conversely, 

in cases where the economic impact is 

expected to be its most significant, it is 

not clear that a substantial number of 

affected institutions would meet the 

criteria to qualify as small entities. 

To the extent that other small entities 

that are not financial institutions may be 

economically affected by the proposed 

rulemaking,169 FinCEN did not include 

any estimates of affected parties or 

calculations of effects in this IRFA 

because those effects, for most nonfinancial institutions, are primarily 

expected to be benefits in the form of 

potential increases in demands for 

services. An attempt to quantify 

increased operating costs accompanying 

these increases in demand generally, 

and for small entities specifically, 

would be so speculative as to be 

uninformative. In the event that a more 

precise forecast could be reliably formed 

with available data and would alter the 

conclusions of this analysis, FinCEN is 

requesting information from the public. 

3. Certification 

When viewed as a whole, FinCEN 

does not anticipate that the proposals 

contained in this rulemaking will have 

a significant impact on a substantial 

number of small financial institutions or 

other potentially affected businesses. 

Accordingly, FinCEN certifies that this 

rule will not have a significant 

economic impact on a substantial 

number of small entities. FinCEN 

invites comments from members of the 

public who believe there will be a 

significant economic impact on small 

entities from the imposition of the first 

special measure regarding CVC 

mixers.170

D. Unfunded Mandates Reform Act 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 171

(Unfunded Mandates Reform Act), 

requires that an agency prepare a 

budgetary impact statement before 

promulgating a rule that may result in 

expenditure by the state, local, and 

tribal governments, in the aggregate, or 

by the private sector, of $100 million or 

more in any one year, adjusted for 

inflation.172 If a budgetary impact 

statement is required, section 202 of the 

Unfunded Mandates Reform Act also 

requires an agency to identify and 

consider a reasonable number of 

regulatory alternatives before 

promulgating a rule.173

As discussed in the foregoing 

analysis,174 it is unclear if either the 

gross or net cost of compliance to the 

private sector would exceed $177 

million annually.175 In the event that 

this is so, FinCEN has performed the 

preliminary analysis above to address 

the potential need to satisfy the 

requirements of the Unfunded Mandates 

Reform Act.176 FinCEN is additionally 

soliciting comments—preferably 

including data, studies, or other forms 

of quantitative analysis—that would 

specifically inform our quantification of 

expected compliance related 

expenditures by state, local, and tribal 

governments and/or the private sector in 

the event that such costs would, in light 

of more complete information, be 

demonstrably expected to exceed the 

annual $100 million threshold, adjusted 

for inflation ($177 million). 

E. Paperwork Reduction Act 

The recordkeeping and reporting 

requirements contained in this proposed 

rule will be submitted by FinCEN to the 

Office of Management and Budget for 

review in accordance with the 

Paperwork Reduction Act of 1995 177

(PRA). Under the PRA, an agency may 

not conduct or sponsor, and a person is 

not required to respond to, a collection 

of information unless it displays a valid 

control number assigned by OMB. 

Written comments and 

recommendations for the proposed 

information collection can be submitted 

by visiting www.reginfo.gov/public/do/ 

PRAMain. Find this particular 

document by selecting ‘‘Currently under 

Review—Open for Public Comments’’ or 

by using the search function. Comments 

are welcome and must be received by 

[90 DAYS AFTER DATE OF 

PUBLICATION IN THE FEDERAL 

REGISTER]. In accordance with 

requirements of the PRA and its 

implementing regulations, 5 CFR part 

1320, the following information 

concerning the collection of information 

as required by 31 CFR 1010.662 is 

presented to assist those persons 

wishing to comment on the information 

collections. 

The provisions in this proposed rule 

pertaining to the collection of 

information can be found in section 

1010.662(b)(1). The information 

required to be reported in section 

1010.662(b)(1) will be used by the U.S. 

Government to monitor the class of 

transactions of primary money 

laundering concern. The information 

required to be maintained by section 

1010.662(b)(3) will be used by federal 

agencies and certain self-regulatory 

organizations to verify compliance by 

covered financial institutions with the 

provisions of 31 CFR 1010.662. The 

class of financial transactions affected 

by the reporting requirement is identical 

to the class of financial transactions 

affected by the recordkeeping 

requirement. The collection of 

information is mandatory. 

Frequency: Covered financial 

institutions would be required to file 

within 30 days of detecting a covered 

transaction.178 As nothing prevents a 

covered financial institution from 

optimizing with respect to scale by 


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72722 Federal Register / Vol. 88, No. 203 / Monday, October 23, 2023 / Proposed Rules 

179This estimate is informed by public and nonpublic data sources regarding both an expected 

maximum number of entities that may be affected 

and the number of active, or currently reporting, 

registered financial institutions and takes into 

consideration the possibility of voluntary reporting 

by certain parties without an express obligation to 

file reports. See Section VIII.A.2(i)(A). 

180Assumes, on average, one full work-day per 

30-day period is required to complete reporting and 

recordkeeping related tasks. Due to the anticipated 

skew in expected annual burden hours, this average 

is unlikely to represent a meaningful approximation 

for most covered financial institutions. 

181This requirement would be independent of 

any recordkeeping requirement pursuant to 31 CFR 

1010.410. 

filing later, while still within the 30-day 

limit, it is foreseeable that despite a 

distinct filing obligation per covered 

transaction, some entities may elect to 

file all required reports still within the 

same 30-day window at a single time, 

effectively reducing the frequency of 

filing. 

Description of Affected Financial 

Institutions: Only those covered 

financial institutions defined in section 

1010.662(a)(4) with engagement in the 

covered financial transactions as 

defined in section 1010.662(a)(5) would 

be affected. 

Estimated Number of Affected 

Financial Institutions: Approximately 

15,000.179

Estimated Average Annual Burden in 

Hours per Affected Financial 

Institution: 98.180

Estimated Total Annual Burden: 

1,470,000 hours. 

FinCEN specifically invites comments 

on: (a) whether the proposed collection 

of information is necessary for the 

proper performance of the mission of 

FinCEN, including whether the 

information would have practical 

utility; (b) the accuracy of FinCEN’s 

estimate of the burden of the proposed 

collection of information; (c) ways to 

enhance the quality, utility, and clarity 

of the information required to be 

maintained; (d) ways to minimize the 

burden of the required collection of 

information, including through the use 

of automated collection techniques or 

other forms of information technology; 

(e) estimates of capital or start-up costs 

and costs of operation, maintenance, 

and purchase of services to report the 

information. 

IX. Regulatory Text 

List of Subjects in 31 CFR Part 1010 

Administrative practice and 

procedure, Banks, Banking, Brokers, 

Crime, Foreign banking, Terrorism. 

Authority and Issuance 

For the reasons set forth in the 

preamble, FinCEN proposes amending 

31 CFR part 1010 as follows: 

PART 1010—GENERAL PROVISIONS 

■ 1. The authority citation for part 1010 

continues to read as follows: 

Authority: 12 U.S.C. 1829b and 1951– 

1959; 31 U.S.C.5311–5314, 5316–5336; title 

III, sec. 314, Pub. L. 107–56, 115 Stat. 307; 

sec. 2006, Pub. L. 114–41, 129 Stat. 458–459; 

sec. 701 Pub. L. 114–74, 129 Stat. 599; sec. 

6403, Pub. L. 116–283, 134 Stat. 3388. 

■ 2. Add § 1010.662 to read as follows: 

§ 1010.662 Special measures regarding 

CVC mixing transactions. 

(a) Definitions. For purposes of this 

section, the following terms have the 

following meanings. 

(1) Convertible Virtual Currency 

(CVC). The term ‘‘convertible virtual 

currency (CVC)’’ means a medium of 

exchange that either has an equivalent 

value as currency, or acts as a substitute 

for currency, but lacks legal tender 

status. Although Bitcoin has legal tender 

status in at least two jurisdictions, the 

term CVC includes Bitcoin for the 

purpose of this section. 

(2) CVC Mixer. The term ‘‘CVC mixer’’ 

means any person, group, service, code, 

tool, or function that facilitates CVC 

mixing. 

(3) CVC mixing. (i) The term ‘‘CVC 

mixing’’ means 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: 

(A) Pooling or aggregating CVC from 

multiple persons, wallets, addresses, or 

accounts; 

(B) Using programmatic or 

algorithmic code to coordinate, manage, 

or manipulate the structure of a 

transaction; 

(C) Splitting CVC for transmittal and 

transmitting the CVC through a series of 

independent transactions; 

(D) Creating and using single-use 

wallets, addresses, or accounts, and 

sending CVC through such wallets, 

addresses, or accounts through a series 

of independent transactions; 

(E) Exchanging between types of CVC 

or other digital assets; or 

(F) Facilitating user-initiated delays in 

transactional activity. 

(ii) Exception. Notwithstanding 

paragraph (a)(3)(i) of this section, CVC 

mixing does not include the use of 

internal protocols or processes to 

execute transactions by banks, brokerdealers, or money services businesses, 

including virtual asset service providers 

that would otherwise constitute CVC 

mixing, provided that these financial 

institutions preserve records of the 

source and destination of CVC 

transactions when using such internal 

protocols and processes; and provide 

such records to regulators and law 

enforcement, where required by law. 

(4) Covered financial institution. The 

term ‘‘covered financial institution’’ has 

the same meaning as ‘‘financial 

institution’’ in 31 CFR 1010.100(t). 

(5) Covered transaction. The term 

‘‘covered transaction’’ means a 

transaction as defined in 31 CFR 

1010.100(bbb)(1) in CVC by, through, or 

to the covered financial institution that 

the covered financial institution knows, 

suspects, or has reason to suspect 

involves CVC mixing within or 

involving a jurisdiction outside the 

United States.181

(b) Reporting and recordkeeping 

requirements. Covered financial 

institutions are required to report 

information in accordance with 

paragraph (b)(1) of ths section and 

maintain records demonstrating 

compliance in accordance with 

paragraph (b)(3) of this section. 

(1) Reporting—(i) Reportable 

information regarding the covered 

transaction. The covered financial 

institution shall provide the following 

reportable information in its possession, 

with respect to each covered 

transaction, within 30 calendar days of 

initial detection of a covered 

transaction: 

(A) The amount of any CVC 

transferred, in both CVC and its U.S. 

dollar equivalent when the transaction 

was initiated; 

(B) The CVC type; 

(C) The CVC mixer used, if known; 

(D) CVC wallet address associated 

with the mixer; 

(E) CVC wallet address associated 

with the customer; 

(F) Transaction hash; 

(G Date of transaction; 

(H) The IP addresses and time stamps 

associated with the covered transaction; 

and 

(I) Narrative 

(ii) Reportable information regarding 

the customer associated with the 

covered transaction. The covered 

financial institution shall provide the 

following reportable information in its 

possession, regarding the customer 

associated with each covered 

transaction: 

(A) Customer’s full name; 

(B) Customer’s date of birth; 

(C) Customer’s address; 

(D) Email address associated with any 

and all accounts from which or to which 

the CVC was transferred; 


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1 In this context and for purposes under CAA 

section 111(d), the term ‘‘existing’’ source is 

synonymous with designated facility. These are 

sources that were constructed, reconstructed, or 

modified on or before the date specified in the 

emission guideline the source applies to. 

(E) Phone number associated with any 

and all accounts from which or to which 

the CVC was transferred; 

(F) Internal Revenue Service or 

foreign tax identification number, or if 

none are available, a non-expired 

United States or foreign passport 

number or other government-issued 

photo identification number, such as a 

driver’s license; and 

(2) Filing procedures. The reports 

required under paragraph (b)(1) of this 

section shall be filed with FinCEN 30 

calendar days from the date of detection 

in the manner that FinCEN prescribes. 

(3) Recordkeeping. A covered 

financial institution is required to 

document its compliance with the 

requirements of this section. 

Dated: October 19, 2023. 

Andrea M. Gacki, 

Director, Financial Crimes Enforcement 

Network. 

[FR Doc. 2023–23449 Filed 10–20–23; 8:45 a.m.] 

BILLING CODE 4810–02–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 62 

[EPA–R06–OAR–2022–0984; FRL–11401– 

01–R6] 

Approval and Promulgation of State 

Air Quality Plans for Designated 

Facilities and Pollutants; Arkansas; 

Negative Declaration for Existing 

Sulfuric Acid Plants; Plan Revision for 

Existing Kraft Pulp Mills 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: Pursuant to the Federal Clean 

Air Act (CAA or the Act), the 

Environmental Protection Agency (EPA) 

is proposing to approve the CAA section 

111(d) state plan revision submitted by 

the State of Arkansas for existing kraft 

pulp mills subject to the Kraft Pulp 

Mills Emission Guidelines (EG). The 

Arkansas section 111(d) plan revision 

for kraft pulp mills contains 

administrative changes to the state 

regulations and also aligns compliance 

testing requirements to be consistent 

with EPA’s kraft pulp mills new source 

performance standards. EPA is also 

notifying the public that we have 

received a CAA section 111(d) negative 

declaration from Arkansas for existing 

sulfuric acid plants subject to the 

Sulfuric Acid Plants EG. This negative 

declaration certifies that existing 

sulfuric acid plants subject to the 

Sulfuric Acid Plants EG and the 

requirements of sections 111(d) of the 

CAA do not exist within Arkansas. The 

EPA is proposing to approve the state 

plan revision for existing kraft pulp 

mills, accept the negative declaration for 

existing sulfuric acid plants and 

withdraw approval of the Arkansas state 

plan for existing sulfuric acid plants, 

and amend the agency regulations in 

accordance with the requirements of the 

CAA. 

DATES: Written comments must be 

received on or before November 22, 

2023. 

ADDRESSES: Submit your comments, 

identified by Docket No. EPA–R06– 

OAR–2022–0984, at https://

www.regulations.gov or via email to 

ruan-lei.karolina@epa.gov. Follow the 

online instructions for submitting 

comments. Once submitted, comments 

cannot be edited or removed from 

Regulations.gov. The EPA may publish 

any comment received to its public 

docket. Do not submit electronically any 

information you consider to be 

Confidential Business Information (CBI) 

or other information whose disclosure is 

restricted by statute. Multimedia 

submissions (audio, video, etc.) must be 

accompanied by a written comment. 

The written comment is considered the 

official comment and should include 

discussion of all points you wish to 

make. The EPA will generally not 

consider comments or comment 

contents located outside of the primary 

submission (i.e., on the web, cloud, or 

other file sharing system). For 

additional submission methods, please 

contact Karolina Ruan Lei, (214) 665– 

7346, ruan-lei.karolina@epa.gov. For the 

full EPA public comment policy, 

information about CBI or multimedia 

submissions, and general guidance on 

making effective comments, please visit 

https://www.epa.gov/dockets/ 

commenting-epa-dockets. 

Docket: The index to the docket for 

this action is available electronically at 

www.regulations.gov. While all 

documents in the docket are listed in 

the index, some information may not be 

publicly available due to docket file size 

restrictions or content (e.g., CBI). 

FOR FURTHER INFORMATION CONTACT: 

Karolina Ruan Lei, EPA Region 6 Office, 

Air and Radiation Division—State 

Planning and Implementation Branch, 

(214) 665–7346, ruan-lei.karolina@

epa.gov. We encourage the public to 

submit comments via https://

www.regulations.gov. Please call or 

email the contact listed above if you 

need alternative access to material 

indexed but not provided in the docket. 

SUPPLEMENTARY INFORMATION: 

Throughout this document wherever 

‘‘we,’’ ‘‘us,’’ or ‘‘our’’ is used, we mean 

the EPA. 

I. Background 

A. Clean Air Act Section 111(d) 

Requirements 

Section 111 of the CAA, ‘‘Standards of 

Performance for New Stationary 

Sources,’’ directs the EPA to establish 

emission standards for stationary 

sources of air pollution that could 

potentially endanger public health or 

welfare. These standards are referred to 

as New Source Performance Standards 

(NSPS). Section 111(d) addresses the 

process by which the EPA and states 

regulate standards of performance for 

existing 1 sources. When NSPS are 

promulgated for new sources, section 

111(d) and EPA regulations require that 

the EPA publish an Emission Guideline 

(EG) to regulate the same pollutants 

from existing facilities. While NSPS are 

directly applicable to new sources, EG 

for existing sources (designated 

facilities) are intended for states to use 

to develop a state plan to submit to the 

EPA. 

State plan submittals and revisions 

under CAA section 111(d) must be 

consistent with the applicable EG and 

the requirements of 40 CFR part 60, 

subpart B, and part 62, subpart A. The 

regulations at 40 CFR part 60, subpart B, 

contain general provisions applicable to 

the adoption and submittal of state 

plans and plan revisions under CAA 

section 111(d). Additionally, 40 CFR 

part 62, subpart A, provides the 

procedural framework by which the 

EPA will approve or disapprove such 

plans and plan revisions submitted by a 

state. Once approved by the EPA, the 

state plan or plan revision becomes 

federally enforceable. If a state does not 

submit an approvable state plan to the 

EPA, the EPA is responsible for 

developing, implementing, and 

enforcing a Federal plan. However, 40 

CFR 60.23(b) and 62.06 provide that if 

there are no existing sources of the 

designated pollutant in the state, the 

state may submit a letter of certification 

to that effect (i.e., negative declaration) 

in lieu of a plan. The negative 

declaration exempts the state from the 

requirements of subpart B that require 

the submittal of a CAA section 111(d) 

plan. 


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