FinCEN Introduces New Rulemaking Proposal To Surveil Crypto Mixing Services, Citing Patriot Act
The Financial Crimes Enforcement Network (FinCEN) has released a new proposal for the US government to begin monitoring crypto mixers.
FinCEN cites Section 311 of the USA PATRIOT Act to propose requirements for financial institutions and financial agencies to keep records and reports on transactions that go through crypto or “convertible virtual currency” (CVC) mixers.
Mixers, such as Tornado Cash, aim to obfuscate the identity of users conducting transactions by running their tokens through a pool of other tokens from random origins and then dispersing the coins to the receiver, often using multiple addresses.
FinCEN says that transactions outside the US are still of concern to the government because such mixers provide foreign bad actors the means to commit crimes.
“Accordingly, because CVC mixing provides foreign illicit actors with enhanced anonymity that allows them to launder their illicit proceeds, FinCEN assesses that transactions involving CVC mixing within or involving a jurisdiction outside the United States are of primary money laundering concern, and, having undertaken the necessary consultations, also finds that imposing additional recordkeeping and reporting requirements would assist in mitigating the risks posed by such transactions.
Such reporting will assist law enforcement with identifying the perpetrators behind illicit transactions and preventing, investigating, and prosecuting illegal activity, as well as rendering such transactions – through increased transparency – less attractive and useful to illicit actors.”
Tornado Cash, the most popular crypto mixer, was blacklisted by the US government in August of 2022, and its creator was arrested shortly thereafter.
However, according to blockchain analytics firm Arkham Intelligence, Tornado Cash is still the largest crypto mixer on Ethereum (ETH) and $77.35 million in assets had moved through it in just a 30-day period.
Featured Image: Shutterstock/Liu zishan