The US Treasury has targeted crypto-mingling in an anti-money laundering campaign

The Biden administration has designated crypto “mixers” as major fundraising centers.

In Thursday's announcement, the US Treasury Department's Financial Crimes Enforcement Network (FinCEN) proposed requiring domestic financial institutions and agencies to “implement certain recordkeeping and reporting requirements” for transactions involving crypto brokers.

The Commission reviewed the “CVC percentage. [convertible virtual currencies] Transactions involving CVC mixers originating from illegal sources are on the rise.

The US Treasury Department's proposal, which uses rules typically used against foreign banks and jurisdictions, is part of a broader effort to shape the future of the crypto ecosystem.

The proposal follows pressure from Capitol Hill regarding the role of cryptocurrencies in financing militant groups, particularly in the wake of the October 7 Hamas attack on Israel.

Treasury Deputy Secretary Wally Adeyemo said: “Today's action underscores Treasury's commitment to combating exploitation by various illicit actors, state-linked cyber actors, cybercriminals and terrorist groups.

There will be a 90-day public comment period before the proposed rule is adopted.

The proposal would allow targeted entities to take corrective action, which could lead to exemptions from sanctions.

The Treasury Department has previously decided not to comply with the final rule because some targets have improved their practices and implemented specific measures to address money laundering risks.

Mixers are cryptocurrency platforms that facilitate relatively anonymous exchanges.

These platforms have come under increased regulatory scrutiny in recent months, with US regulators imposing sanctions and forcing their founders to pay.

Financial institutions are required to collect information related to the mixer.

The proposed rules require U.S. financial institutions and agencies to identify, collect, and report specific information related to international hybrid transactions, including personal and transaction details.

Public classification of mixers as major money laundering threats could give the Treasury Department broad punitive authority, including the ability to cut targets off from U.S. markets.

The Treasury is proposing to use seldom-used powers established after the September 11, 2001, terrorist attacks, often referred to as “death care sanctions.”

These powers allow them to shut down foreign banks and other financial institutions deemed to be national security threats.

While mixers represent only a fraction of the crypto market, the proposed regulation sends a warning to other crypto platforms.

Treasury officials justified their actions by highlighting the acute money laundering and national security risks associated with global volatile virtual currency mixing activities.

“Increasing transparency in this domain is critical to preventing illegal actors from entering the U.S. and international financial systems,” the Treasury Department said.

Experts suggest that FinSe's proposal will have a chilling effect on some crypto activities, further linking them to terrorist financing and money laundering.

However, the recent crackdown by US authorities on mixers is not surprising.

In recent years, the US Treasury and Justice Departments have prioritized targeting crypto platforms that offer anonymous services or have weak compliance systems, allowing bad actors to finance their operations.

Several crypto platforms have faced sanctions and fines for facilitating money laundering.