The U.S. Treasury Department has unveiled plans to categorize all cryptocurrency “mixers” as potential money-laundering hubs. The announcement cites threats to national security.
If the proposed rule is accepted, it will compel financial institutions to report any transactions involving crypto mixers. This includes domestic or international if there are suspicions of money laundering. The policy is now open for a 90-day public comment period.
This proposal signifies a significant shift in the U.S. government’s stance on crypto mixers. Last year, the Treasury Department imposed sanctions on Tornado Cash, a mixer used for private transactions on the Ethereum network. The move was based on the platform’s association with entities hostile to the U.S., including the Lazarus Group, a North Korean hacking group.
However, the new announcement automatically labels any international cryptocurrency mixer as a national security risk, irrespective of its usage context. The decision is notably linked to the ongoing Israel-Palestine crisis, where crypto has been linked to the funding of attacks by Hamas.
Right or wrong?
A Treasury Department official explicitly connected recent events in the Middle East to the Treasury’s decision to tighten its policy. Deputy Treasury Secretary Wally Adeyemo stated that this action underscores the commitment to combating the illicit use of cryptocurrency mixing by various nefarious actors, including state-affiliated cyber groups, cybercriminals, and terrorist organizations like Hamas.
Nevertheless, many in the crypto industry oppose such measures. Sanctions against Tornado Cash last year were contested as an unlawful threat to user privacy. Industry leaders and analysts are now challenging the narrative that crypto is disproportionately responsible for the Israel-Palestine crisis or poses greater security threats than traditional banking systems.
