In an unprecedented move aimed at enhancing transparency in crypto markets, the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) has proposed new rules targeting crypto mixers. According to the agency, these mixers are primary concerns in money laundering and other illicit financial activities. The rules, if implemented, will require U.S. financial firms to exercise heightened due diligence with accounts involved in crypto mixing.
FinCEN issued its notice of proposed rulemaking last Thursday, opening it for public comment for 90 days. Besides, the action taken by the agency reflects the U.S. Treasury’s commitment to combating the misuse of crypto technologies by various illegal actors around the world. Moreover, this proposal marks FinCEN’s “first ever use” of its authority to focus on a whole class of transactions as money laundering concerns. The rule would be finalized after the agency reviews public input received during the comment period.
Global concerns on the rise
Deputy Secretary of the Treasury Wally Adeyemo said the initiative is a critical part of the government’s broader efforts to combat illicit use of the crypto ecosystem. FinCEN Director Andrea Gacki echoed this sentiment, emphasizing the risks posed by crypto mixers in laundering money for rogue state actors and criminals.
Hence, it comes as no surprise that international attention is growing around the risks associated with crypto mixing. Significantly, the agency named specific groups, including Hamas and the Democratic People’s Republic of Korea (DPRK), as beneficiaries of such illicit services. Additionally, the Treasury has already announced sanctions against entities tied to Hamas this week, showing their commitment to action.
FinCEN’s proposed rules are a continuation of earlier actions targeting crypto-related money laundering activities. The agency has previously designated various other services, like Blender.io and Tornado Cash, for their roles in laundering large sums of money. However, this new rule specifically targets crypto mixing as a class of transaction, thus broadening the scope of regulatory oversight.
These regulations come at a time when lawmakers are putting pressure on the Biden administration to take decisive steps against the use of cryptocurrencies for terrorism funding. Consequently, the proposed rule would require financial institutions to report transactions suspected to involve crypto mixing, particularly those taking place outside the United States.
While the broader impact of these proposed rules on the global crypto market remains to be seen, it’s clear that the U.S. government is taking increasingly assertive steps to monitor and regulate this space. Hence, market participants should expect a more transparent and possibly restrictive environment moving forward.