Why Crypto Mixers Face Scrutiny From US Treasury Department

The United States Treasury Department has issued a proposal targeting international cryptocurrency exchange platforms known colloquially as “crypto mixers.”

The move comes amid growing concerns from Capitol Hill about the funding of crypto-militant groups. This was exacerbated after the October 7 Hamas attack on Israel.

US Treasury Targets Crypto Mix

The new proposal uses rules that normally apply to foreign banks and jurisdictions. Next is the need for careful recording and reporting of transactions involving crypto-mixers.

This proactive step represents a significant regulatory advance. Indeed, it aims to shape the future shape of the world's financial system by illuminating crypto-mixers, platforms that allow users to trade under the guise of anonymity, as primary means of money transfer, posing a threat to national security.

“Today's action underscores the Treasury's commitment to combating the manipulation of virtual currency by a variety of illicit actors, including government-linked cyber actors, cybercriminals, and terrorist groups.” More broadly, the Treasury Department is aggressively combating all illicit uses of the CVC (convertible virtual currency) ecosystem, including by Hamas and Palestinian Islamic Jihad,” said Deputy Treasury Secretary Wali Adeyemo.

The new proposed rule, seen by the Financial Crimes Enforcement Network, is subject to a 90-day public comment period before adoption. The idea of ​​rulemaking allows targeted entities to take corrective action, potentially exempting them from sanctions.

Past instances have seen Targets improve their practices and implement significant improvements to reduce money laundering risks. As a result, he directed the Treasury to withdraw the final rule, which included special measures.

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Still, the striking aspect of this proposal is its invocation of rarely used powers known as “death knell sanctions” developed after the September 11, 2001, terrorist attacks. Although crypto mixers are a small fraction of the cryptocurrency market, they can serve as fertile ground for money laundering and terrorist financing.