The US Treasury Department is currently in the process of implementing a ban on tools that provide privacy for cryptocurrency transactions. This comprehensive ban, known as the “mixer rule,” is set to restrict the use of privacy-enhancing software and methods in cryptocurrency transactions.
Andrea Gacki, Director of the Financial Crimes Enforcement Network (FinCEN), recently announced in Congress that the “mixer rule” is nearing its final stages. This regulation, utilizing powers granted by the PATRIOT Act, aims to enhance oversight and investigative capabilities in the realm of digital assets, similar to what has been done in the traditional financial sector.
Under the “mixer rule,” various on-chain transactions that offer privacy features will be classified as a “primary money laundering concern.” These include combining or splitting funds from multiple wallets, splitting transactions into smaller parts, creating disposable wallets or addresses, swapping between cryptocurrencies, and applying user-induced delays to transactions. The broad definitions outlined in this rule have raised concerns among experts, who fear that legitimate users could inadvertently be flagged as potential criminals.
In addition to the work being done by FinCEN, there is a renewed focus on the Special Measures to Fight Modern Threats Act in Congress. This bill, previously thought to be dormant, is now back on the table for discussion. If passed, this act could grant the Treasury Department the authority to prohibit all crypto transactions that are verified through foreign entities, exchanges, or miners, without the need for public due process. Critics of this potential regulation argue that it could lead to a withdrawal of US banks and crypto exchanges from global transactions, ultimately taking an authoritarian approach.
Representatives from the cryptocurrency industry have voiced concerns about the implications of a complete ban on privacy software. They argue that such a ban would not only disadvantage criminals but also individuals seeking protection from oppressive regimes. The final decision on these regulations will be closely watched in the coming weeks to see which direction the US government chooses to take.
As always, it is important to note that this information is not intended as investment advice. Stay informed and stay vigilant in the evolving landscape of cryptocurrency regulations.