US Withdraws Crypto Rule Proposal as European Union Information Checks Remain

Financial authorities in the United States, including FinCEN and the Federal Reserve, have officially withdrawn a 2020 proposal that sought to lower the threshold for tracking cross-border crypto transfers. The move, confirmed on November 6 and formalized in the Federal Register on November 9, means that existing U.S. requirements remain in place. While this decision prevents the extension of data duties to smaller transactions, users interacting with Europe must still navigate complex regulations that can affect even a $500 crypto payment.

Under the original October 2020 proposal, the government aimed to reduce the threshold for specific recordkeeping and information-transmission duties from $3,000 to $250 for transfers involving parties outside the United States. Agencies cited the passage of over five years, evolving virtual-currency markets, and the need for further public feedback as reasons for the withdrawal. Consequently, the current U.S. Travel Rule threshold remains at $3,000.

The U.S. has dropped a proposed crypto reporting threshold, but EU regulations still require data for small transfers.

Navigating European Union rules

While the U.S. has stepped back from lowering its domestic reporting threshold, the regulatory landscape in the European Union remains stringent. Since December 30, 2024, the EU has enforced a crypto-transfer regulation that applies to any service provider with a registered office in the bloc. Unlike the U.S. framework, the EU regulation does not provide a general exemption for small crypto transfers, meaning that a $500 transfer between exchanges is subject to mandatory information collection.

If a user sends funds from a U.S. exchange to an EU-registered provider, the receiving institution is legally obligated to collect specific data, including the names of the sender and recipient, blockchain addresses, and account identifiers. If this information is missing or incomplete, the EU provider must act on a risk-sensitive basis. This may involve rejecting or returning the transfer, or suspending the assets until the necessary details are provided. As a result, even if the crypto assets arrive on the blockchain, a user may be unable to access them until the exchange completes its verification process.

Why it matters

The withdrawal of the U.S. proposal provides clarity for domestic institutions, maintaining the status quo for reporting requirements. However, the divergence between U.S. and EU standards highlights the ongoing friction in cross-border digital asset movements. For users, this means that compliance obligations are determined by the location of the receiving provider, making it essential to understand the specific rules of the jurisdiction involved.