The U.S. Financial Crimes Enforcement Network withdrew its proposed cryptocurrency blending regulation draft due to concerns about legal activity.

The U.S. Treasury Department's Financial Crimes Enforcement Network announced on Monday that it had withdrawn two proposed regulations affecting law enforcement and crypto companies, one of which relates to "convertible virtual currency blends".

Withdraw the motion for evidence and report.

According to Monday's announcement, the network will withdraw a December proposal2020 that mandated crypto firms be responsible for recording, auditing and reporting crypto transactions including unhosted wallets ( wallets ), as well as other proposals affecting law enforcement and cryptocurrency-mixed services.

The network noted that the mixed-service proposal, which was first proposed in October,2023 could cause disruption to legitimate activities and create a large reporting burden on financial institutions under its purview.

Reducing existing control and authority.

The statement also claimed that the network had considered comments submitted to such proposals and withdrawn those proposals as part of President Trump's executive order reduction mandate and ongoing efforts to make digital asset regulation fit for purpose.

The withdrawal is the latest move by the agency responsible for regulating digital assets in the U.S., which cited Trump's administration's "crypto-war". Earlier on the same day, Commodity futures trading Commission Chairman Michael Selig announced that the agency was exercising its existing statutory powers under Proposition 2.

Industrial reaction and related issues

Several crypto and blockchain industry representatives praised the network for dropping its regulation of mixed cryptocurrency services and reporting requirements on unregulated wallets. In a post on Platform X on Monday, crypto 's Council for Innovation called the decision "positive to the digital asset ecosystem".

For the reader, this move indicates that federal regulatory agencies are easing documentary pressures on crypto businesses, especially those that may require additional scrutiny or reporting when using unregulated wallets and mixed-currency digital currency services, while the use of existing powers by the U.S. Commodity Futures Trading Commission also signals that agencies may be moving toward cryptocurrency policy without waiting for further authority from Congress.

In related news, industry representatives have also come out in response to the bank's lawsuit against the U.S. Office of the Comptroller of the Currency (OCC) over licensing