Scott Melker points out that the U.S. Treasury Department quietly withdrew two crypto regulations: the reporting requirement for self-hosted transfers over $10,000, and the tracking rule targeting mixers.
Both rules originally pointed in the same direction: making self-custody and private transactions easier to track.
But that’s also where the problem lies.
If reporting obligations are imposed directly at the wallet level, regulators won’t just be dealing with illicit funds—they’ll also sweep in a large number of ordinary users.
The Treasury Department specifically cited concerns about a “chilling effect” when it withdrew the mixer rule.
This is actually a very important signal: privacy tools are not inherently criminal tools. If efforts to track a small amount of illicit money strip all ordinary users of their privacy, regulation itself could create new problems.
So what’s really worth watching this time isn’t just the withdrawal of the two rules, but the possibility that the regulatory approach is changing.
The focus may be shifting from “regulate first, ask questions later” to reassessing the enforcement costs and unintended harms of the rules themselves.
Sometimes, recognizing which rules shouldn’t remain in place is also a form of regulatory progress.
Both rules originally pointed in the same direction: making self-custody and private transactions easier to track.
But that’s also where the problem lies.
If reporting obligations are imposed directly at the wallet level, regulators won’t just be dealing with illicit funds—they’ll also sweep in a large number of ordinary users.
The Treasury Department specifically cited concerns about a “chilling effect” when it withdrew the mixer rule.
This is actually a very important signal: privacy tools are not inherently criminal tools. If efforts to track a small amount of illicit money strip all ordinary users of their privacy, regulation itself could create new problems.
So what’s really worth watching this time isn’t just the withdrawal of the two rules, but the possibility that the regulatory approach is changing.
The focus may be shifting from “regulate first, ask questions later” to reassessing the enforcement costs and unintended harms of the rules themselves.
Sometimes, recognizing which rules shouldn’t remain in place is also a form of regulatory progress.