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Congressman proposes bill to ban crypto mixing protocols, threatening privacy coins
- The Blockchain Integrity Act prohibits financial services from processing coin mixer transactions and stipulates a $100,000 civil penalty for violators.
- The bill proposes that the ban last two years, during which the Treasury Department would compile a report on the sector to inform future action.
A new bill introduced in the US House of Representatives seeks to ban cryptocurrency mixers for two years while isolating them from all registered virtual asset service providers (VASPs) for two years.
Congressman Sean Casten (IL-06) introduced the Blockchain Integrity Act, which is co-sponsored by Representatives Brad Sherman (CA-32), Bill Foster (IL-11), and Emanuel Cleaver (MO-05).
The project is the U.S. government’s latest attempt to crack down on mixers. For years, the government has been trying to restrict the use of mixers. In some of its most drastic efforts, the Justice Department has accused the founders of Tornado Cash, the most popular mixer, of money laundering and sanctions violations. Two Tornado Cash developers were arrested and released on bail; They have I have been fighting the accusations since then, as Crypto News Flash reported.
The new bill aims to further crack down on mixers. It states that six months after it comes into force, it will be illegal for any registered financial institution to move funds routed through a mixer.
Congressman Casten described mixers as “the key to allowing illicit actors to instantly move large amounts of money around the world for criminal purposes without being detected.”
He added:
Cryptocurrency has been used to finance terrorist attacks around the world. Half of North Korea’s nuclear program is financed through cryptocurrency theft enabled by mixers. A temporary ban while we study this technology will help us better understand how it is used for illicit purposes, prevent future crypto-funded terrorism, and inform future policy decisions.
New Bill Cracks Down on Crypto Mixers and Privacy Coins
The bill requires the Treasury Department to partner with the SEC, CFTC, and Attorney General to study the industry in the two years before the mixer ban.
This study will extend beyond mixers and cover anonymous cryptocurrencies. It requires a study on the percentage of mixed cryptographic and privacy currencies destined for illegal activities and the government’s ability to track and freeze these assets.
Lawmakers gave as an example Binance, which reportedly sued for more than $250 million from Bestmixer, a Dutch coin mixer that was shut down in 2019 by authorities for facilitating crime.
Congressman Sherman commented:
The intent of cryptocurrency is right there in its name, a form of “hidden money,” and there is no more useful tool for facilitating that goal than crypto mixers. Terrorist groups, sanctions evaders, tax evaders, cybercriminals, etc. all use scramblers to hide their illicit activities.
While lawmakers relegate crypto to a criminal haven, it is important to note that blockchain analysis from several reputable companies has proven that crime only accounts for a small percentage of crypto volume. Last year, crime accounted for just 0.34% of total crypto volume.